GBP/USD: options market has retraced major chunk of bearish bias

• Risk reversals show falling demand for GBP puts.

The GBP/USD weekly 25 delta risk reversals (GBPSWRR) are being paid at 0.30 GBP puts vs. 0.40 GBP puts a week ago and 1.0 GBP puts in February. The decline in the implied volatility premium for GBP puts as highlighted by the risk reversals indicates falling demand for the GBP puts (sell GBP).

The risk reversals add credence to the bullish technical setup as seen in the daily chart. Also, risk reversals could turn positive if the Bank of England (BOE) minutes show a hawkish interest rate vote split.

GBPSWRR