Pound Traders Look Complacent With Brexit Trade Battle Looming
- Volatility bets yet to reflect flash points in EU-U.K. talks
- Market may be underpricing the uncertainty: Rabobank’s Foley
London Stock Exchange (LSE) in London.
Photographer: Jason Alden/BloombergThis article is for subscribers only.
When it comes to judging Brexit risks, pound traders appear lost at sea -- at least if bets on volatility are anything to go by.
That part of the market is sending contrasting signals: the cost of hedging against swings in sterling is above those for the dollar, euro and yen, yet barely indicates any increase in risk over the next 12 months. That’s despite looming Brexit deadlines in the summer and year-end that could send shock waves through U.K. markets.