The USD regained some lost ground against GBP on Friday, but the options market still seems concerned about an eventual test of December 2019 highs at 1.3500.
The recent USD downtrend helped GBP/USD to reach 1.3185 last week, just shy of March highs at 1.3200-10 and related option barriers, before some profits were booked.
Friday's post-non-farm payrolls setback stopped shy of 1.3000 and has recovered to 1.3075 since.
Last week saw increased demand from option users concerned about more GBP/USD gains to 1.3500 nL1N2F8086 and those options remain in play, with more buyers on the setback in spot and implied volatility since, allowing additional topside exposure at cheaper levels.
Risk reversals show implied volatility premium for GBP puts over calls fell to its lowest since the start of the coronavirus crisis at 0.2 in the one-month expiry contract last week.
It's little changed since, meaning dealers are yet to add more premium to options that would benefit from a deeper GBP/USD retracement.
For more click on FXBUZ