• Option risk reversals charge a premium for strikes in one direction vs other

• That direction will be the most vulnerable and prone to volatility/demand

• Like EUR/USD, GBP/USD risk reversals trade 5-year highs for USD puts

• USD puts in GBP/USD give holders the right to sell USD and to buy GBP

• Premiums stay firm despite settled GBP/USD spot and lower implied volatility

• Highlights expectations/hedging for deeper USD declines to come

• Related comment FX options offer clues on the EUR/USD outlook
GBP/USD risk reversals

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