• Shorter dated expiry GBP related FX option implied volatility is under the cosh early Wednesday

• Sales of 1-week vol from the mid 5s and 1-month at 5.9 and 5.85, plus various sub 1-month strikes

• Implied vol sales that cheapen option premiums typically indicate expectations of low realised volatility

• That fits as GBP eases now Andy Burnham is UK PM and cabinet picks remove FX surprise risk

• GBP/USD has dropped back from July 15 high since May at 1.3556 to the middle of long term ranges in the mid 1.33's

• For benchmark 1-month vol, 5.5 marks the recent and 2026 low — a likely support level

• Related comment - FX option pricing nears its limits
GBP/USD FXO implied volatility


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