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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
GBP
- Options markets picking up on GBP weakness in a similar fashion to spot, with 3m risk reversals tilting back below 2 points in favour of puts today - which will mark the lowest close since mid-March and the initial Russian invasion of Ukraine.
- This steepens the SMILE curve further in favour of OTM puts, with the curve shifting considerably over the past week as spot GBP/USD slides and flagging further downside risks in the pair.
- On a fundamental basis, GBP is now the second most undervalued currency in G10 (with JPY in the bottom spot) using a BEER model, which gauges GBPUSD as over 20% undervalued relative to fundamentals.
- Wednesday's move proves that markets remain happy to sell the pair despite technically oversold signals. Earlier this week, the 14d RSI flagged that the pair was most oversold since March 2020 and the initial wave of COVID - but the pair has shown few signs of bottoming out.
- Key supports to watch include 1.2495 (61.8% retracement of the Mar 2020 - Jan 21 bull leg) as well as 1.2423.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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