Please be advised that the 25-delta risk of reversal of GBPUSD has not been indicating any dramatic shoot up nor any slumps (no fresh change in risk reversals has been observed), but seems to be one of the pairs to be hedged for downside risks as it indicates puts have been relatively costlier.

The risk reversal curve has been traveling in a linear direction, while spot curve is slumping downwards back to converge with the RR curve.

GBPUSD’s range bound pattern is still persisting but some bearish candles are indicating slight weakness on both weekly and monthly charts, (Ranging between upper strikes 1.2730 and lower strikes at around 1.2082 levels.

We could still foresee this range bounded trend to persist in near future but little weakness on weekly charts is puzzling this pair to drag southward targets but very much within above stated range.

Hence, we could only speculate this pair with reducing vols soon after BoE meeting that is scheduled next week. GBPUSD interim bulls drift in sideways, major downtrend still remains intact.

The cable volatility surface has returned to levels seen at the start of the year overall, but risk reversals and butterflies are now excessively cheap: - The sell-off in the cable skew is exaggerated compared to ATM volatility, since the risk remains asymmetric on the downside; - The tail risk is mispriced, as the GBP/USD butterfly is now less expensive than the EUR/USD butterfly, which is unsustainable given the GBP extra tail risk.