The big banks have been in a hostile mode to ship British jobs overseas and cripple the economy if the nation’s Treasury fails to slow the nation’s exit from the European Union. This would leave Britain under the thumb of Brussels for longer than the nation’s voters have demanded. The outrage has already begun.

Two camps arose after the election. One for a quiet exit, and one for a longer term exit. Markets seemed to show power brokers had opted for a longer term exit. That exit is going to only take longer now if the international banks get their way.

Our bearish view on GBP has been intact for a year although we have been highlighting in recent publications that cheap valuations, crowded shorts, and headline risk warrant cautious shorts implemented through options.

Although this trade has underperformed but not have gone adverse, we would still maintain exposure with time decay high given less than three weeks to maturity (while also monitoring the sport relative to the 1.27 strike on the short call).

Moreover, the external BoP vulnerabilities of the UK keep us bearish. The base case is for Article 50 to still be triggered in late Q1.

City of London bankers have cautioned the UK government that the British economy will suffer if their terms aren’t met. Meanwhile, European statesmen are foaming at the mouth to lure international banks to their capitals and put an end to the City’s reign as a global financial powerhouse.

Given that this has come against the backdrop of record shorts in the currency, combined with ongoing Supreme Court proceedings, has contributed to the squeeze, sterling bears remain intact.

Hence, stay short GBPUSD via a bearish seagull like patterns; alternatively, also like to encourage trades in 2m GBPUSD 1.25-1.20 put spread, sell a 1.27 call. Marked at -51.7bp.