Moldova Criticizes Russia Amid Transdniestria Energy Crisis 
Fed Chair Kevin Warsh Signals Policy Overhaul as Hawkish Rate Outlook Rattles Markets 
US Gas Market Poised for Supercycle: Bernstein Analysts 
New Zealand Unemployment and Inflation Debate Intensifies Ahead of 2026 Election 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
BOJ Raises Interest Rates to 1% as Inflation Pressures Persist 
RBI Holds Interest Rates at 5.25%, Cuts India Growth Forecast Amid Rising Global Risks 
BOJ Rate Hike Expectations Rise as Weak Yen and Strong U.S. Jobs Data Increase Pressure 
RBI Hits Pause as Geopolitical Storm Clouds Gather 
RBA Expected to Hold Interest Rates at 4.35% as Markets Watch AUD/USD and ASX 200 
South Korea Central Bank Holds Interest Rates Steady Amid Inflation Concerns 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
Jerome Powell Warns Against Politicizing the Federal Reserve, Defends Democratic Institutions 
The big picture for sterling remains generally constructive, however, the setback against the USD can be extended slightly. The political deadlock in the Brexit drama however persists, so that deeper countertrend declines can’t be excluded yet. The latter just received stronger evidence via the break below 1.2916 (minor 76.4 %) in Cable, which increased the risk of extending lower to 1.2772 levels.
OTC Updates: Negative bids for the GBPUSD risk reversals across all tenors remain intact. While positively skewed implied volatilities of 3m tenors have still stretched towards OTM put strikes. To substantiate this downside risk sentiment, risk reversals have also been signaling bearish hedging sentiments.
We reckon that the sterling should not suffer like before, but, one should not disregard the Brexit settlement risks on the other hand. The market has always ignored the fact that all the current BoE interest rate moves are due to a favorable result of the Brexit process.
Both the speculators and hedgers of GBPUSD are advised to capitalize on the abrupt price rallies for bearish risks and bidding theta shorts in short run (1m IVs) and 3m risks reversals to optimally utilize delta longs.
Strategic Options Recommendations: On hedging grounds, fresh delta longs for long-term hedging comprising of ATM instruments and OTM shorts in short-term would optimize the strategy.
So, the execution of hedging positions goes this way: Short 1m (1%) OTM put option (position seems good even if the underlying spot goes either sideways or spikes mildly), simultaneously, initiate longs in 3m ATM -0.49 delta put options. A move towards the ATM territory increases the Vega, Gamma, and Delta which boosts premium.
Thereby, the above positions address both upswings that are prevailing in the short run and bearish risks in the long run by delta longs. Courtesy: Sentrix & Saxo
Currency Strength Index: FxWirePro's hourly GBP spot index is inching towards 81 levels (which is bullish), and hourly USD spot index has bearish index is creeping at -132 (bearish) while articulating (at 08:17 GMT).
For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex
