Traders and investors who primarily trade pounds may be moving away from reality with all this obsession for March 29, the day Britain must leave the European Union.
As long as they are quick to buy options that help them protect themselves against sudden currency movements on their way out, they are lagging behind the volatility ahead of the end of the first quarter of the year. This means that they are at risk of paying more for protection that they do not yet need or take on their current profits if the currency undergoes early significant price changes during that time.
The volatility over two-month GBP / USD options has relatively high activity around the leaks. In this case, Monday's volatility rises to a one-month high. Europe and Britain are working on a legal project on conditions around the Irish border, and time is running out for Theresa May to win the Parliament and back her for the deal. This week there is a scheduled meeting between May and Jean - Claude Juncker, which will be of great importance.
The optimism that the meeting will bring positive progress in the negotiations has driven a rally rally in the pounds, which has helped Cable to keep above $ 1.30.
Source: Bloomberg Finance L.P.
Graphs: Used with permission of Bloomberg Finance L.P.
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