• Immediate effect of Trump tariffs was to sell USD, helping GBP/USD to 1.3207

• Sub 1-month expiry GBP/USD risk premiums posted a rare topside risk premium

• 1-month 25 delta risk reversals 0.2 GBP calls over puts - highest since 2020

• However, its reverted to 0.35 for GBP puts over calls (downside strikes)

• Comes amid spot setback sub 1.30, with outright demand for 1.28-1.27 strikes

• However, implied volatility (gauges realised volatility risk) extends highs

• Benchmark 1-month reached 9.75 - up from 7.0 on April 2 and high since Jan

• Related comments
GBP/USD risk reversals


GBP/USD FX option implied volatility

(Richard Pace is a Reuters market analyst. The views expressed are his own)