Most options will hurt sterling as Theresa May is now odds-on to resign in 2018. Examine the extensive 30 January GBPUSD Technical Outlook for more.
30 January, GKFX – GBP/USD options activity indicates a near-term top could be in place at 1.4345 (Jan. 25 high).
- Risk reversals indicate falling demand for GBP calls.
- Theresa May is now odds-on to resign in 2018, most options will hurt sterling.
The implied volatility premium for GBP calls over GBP puts has quickly faded, as indicated by the risk reversals, suggesting investors are less concerned about a further near-term rally in GBP.
GBP/USD One-week 25 delta risk reversals are paid at 0.22 GBP puts today from a 0.17 GBP call bias two weeks ago. Meanwhile, the benchmark 1-month 25 delta risk reversals are 0.03 GBP calls from 0.375 GBP calls last week (also the long-term high).
PM May’s resignation could hurt Pound
Speculation is on the rise that “window is closing” on PM May’s leadership after recent complaints about her lack of vision and rows about the direction of Brexit. That said, May’s exit could be bad for the British Pound.
Meanwhile, the battered greenback could find bids if the Fed statement sounds hawkish and Friday’s wage growth numbers beat estimates. Given the overall situation, the probability of cable revisiting the recent highs above 1.43 is low.
30 January GBPUSD Technical Outlook
As of writing, the spot is trading at 1.4046 levels. A close below 1.4021 (10-day MA) would add credence to the argument put forward by risk reversals (that a top has been made) and open doors for a deeper pullback to 1.3902 (50% Fib R of 1.3458-1.4345). On the other hand, breach of immediate resistance at 1.4080 (1-hr resistance) could yield re-test of 1.4141 (1-hour 50-MA) and 1.4162 (1-hour 100-MA).
This article 30 January GBPUSD Technical Outlook was written by analysts at GKFX. The information provided herein is for general informational and educational purposes only. It is not intended and should not be construed to constitute advice.
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