2025 Market Outlook: Key January Events to Watch 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
Bank of America Posts Strong Q4 2024 Results, Shares Rise 
Wall Street Analysts Weigh in on Latest NFP Data 
China’s Growth Faces Structural Challenges Amid Doubts Over Data 
Indonesia Surprises Markets with Interest Rate Cut Amid Currency Pressure 
US Gas Market Poised for Supercycle: Bernstein Analysts 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
China's Refining Industry Faces Major Shakeup Amid Challenges 
Global Markets React to Strong U.S. Jobs Data and Rising Yields 
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
U.S. Stocks vs. Bonds: Are Diverging Valuations Signaling a Shift? 
Goldman Predicts 50% Odds of 10% U.S. Tariff on Copper by Q1 Close 
Gold Prices Slide as Rate Cut Prospects Diminish; Copper Gains on China Stimulus Hopes 
Sterling has been the underperformer among G10 FX space, thanks to the chaotic Brexit process to date. The Q1 outlook for the cross is binary: either a friendly Brexit or not.
While the UK government has cancelled a parliamentary vote on the divorce settlement. UK Prime Minister May is to go to Brussels to renegotiate. One of the many EU presidents (Tusk this time) has said the EU will not renegotiate but it will help get ratification which sounds a bit like a soft renegotiation.
OTC hedging updates: Please be noted that the positively skewed IVs of GBPJPY of 2m tenors signify the hedgers’ interests to bid OTM put strikes upto 134 levels (refer above nutshells evidencing IV skews).
As both interpretations make sense they are balancing the spot market and GBP spot levels are reacting hardy at all. Only volatility is increasing.
It remains more expensive to hedge against strong GBP depreciation, which means that an orderly Brexit in whatever shape is still seen as being more likely. However, the risk of things going wrong is high and as a result, we regard any GBP appreciation with much scepticism.
Although you are seeing risk reversals showing fresh positive bids to the existing bearish setup, while the positively skewed GBPUSD implied volatilities of 2m tenors still signal bearish hedging sentiments. To substantiate this downside risk sentiment, risk reversals have also been in negative territory adding minor negative bids in the short-run. We see less volatile swings in GBPUSD, if you plot weekly technical chart.
Currency Strength Index: FxWirePro's hourly GBP spot index is showing -24 (which is mildly bearish), while USD is flashing at -4 (which is neutral), while articulating at (09:40 GMT).
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
