September 28, 2022 02:26 AM ET
GBP/USD posted gains in the early hours of European trading on Wednesday and managed to break away from its daily low and regain the 1.0700 level. As a result, currency traders are finding it difficult to justify overall U.S. dollar strength and domestic pessimism amid mixed concerns in the options market.
The one-month risk reversal (RR) for the British pound (GBP), a measure of the ratio of calls to puts, broke a two-day downtrend with a reading of 0.160, according to the latest Reuters data.
However, on a weekly basis, the options market barometer remains negative for the second consecutive week at -0.685, taking into account the weekly data from Reuters.
The positive value indicates that a higher premium (option price) is paid for call options than for put options or bearish bets.
In other words, the options market is siding with the bears after a sharp decline in recent days.