Pound Traders See Brexit Risk Rising at the Time of EU Summit
- Currency options markets show bets that talks will go to wire
- Little panic in near term, but climb further along the curve
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The currency options market is betting that trade talks between the U.K. and the European Union will go down to the wire, which leaves room for outperformance of volatility gauges spread over different tenors.
Sterling’s volatility surface against both the dollar and the euro as well as risk reversals show there is little panic over immediate maturities stretching from one week to a month, but climb thereafter in time for a key European Union summit.