Pound Traders Are Ready for Another 8% Slump After Selloff

Options data point to breach of $1.20, and even deeper losses
Volumes are higher than during Truss era, Brexit referendum

WATCH: Former Goldman Sachs Asset Management Chair Jim O’Neill says the pound’s fall has been exaggerated. “We have a very strong dollar and the dollar is rising against many, many currencies,” he says.Source: Bloomberg

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By Vassilis Karamanis and Alice Atkins

January 12, 2025 at 6:00 PM UTC

Updated on

January 13, 2025 at 8:07 AM UTC

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Traders in the options market are preparing for the pound to tumble as much as 8% more as fiscal woes that prompted a painful selloff across UK markets last week weigh on the currency.

There’s sizable demand for contracts that pay out below $1.20 — around 1% lower than where the currency was trading on Monday — according to data from the Depository Trust & Clearing Corporation. Some traders are even betting on sterling falling below $1.12, the weakest level in more than two years.