UK Prime Minister Boris Johnson will offer his Brexit backstop alternative to the European Union later Wednesday, leaving GBP vulnerable to related headlines nL2N26N0FM.
If the EU sees the proposals as a serious attempt at compromise, they could form the basis for further discussion, but if recent leaks of the alleged plan is any gauge, that's unlikely.
Short-dated GBP option vols are elevated, reflecting the GBP volatility risk, but they aren't excessive.
Those expiries encompassing the most likely UK election dates remain the highest on the vol curve, with more premium to protect against GBP losses than gains nL2N26N086.
EUR/USD vols were already hinting at limited spot downside nL2N26M06S before Tuesday's awful U.S. manufacturing data hurt USD, leaving it vulnerable to more bad news and strengthening the 1.0863-50 EUR/USD support level nL2N26N05G.
USD/JPY one-month implied vol trades at a four-week high at 7.0 amid weaker USD and broader risk aversion fears nL2N26N0DU.
USD/JPY options leaning toward a spot setback for weeks nL2N26A07B.
AUD/USD vols edge higher as AUD/USD flirts with 10-year lows nL2N26N07K.