Despite a far quieter spot market, GBP.....>

STERLING: Despite a far quieter spot market, GBP options are still running rife,

with GBP/USD and EUR/GBP hedging surging well beyond recent averages. As such,

vols have added to recent gains today, with 3m edging north of 11 points for the

first time since late March.

-Markets are clearly opting to hedge against further downside, with GBP put

demand well exceeding that of calls so far today (over $3 in puts has traded for

every $1 in calls so far today). Volatility bets covering the Summer months have

been popular, with one of the larger trades crossing consistent with a Gbp100mln

$1.19/1.26 strangle rolling off at the end of September. Vanilla strikes at

$1.20, $1.19 and as low as $1.1750 have garnered the most significant interest.

-Options markets currently imply around a one in four chance of GBP/USD trading

below the post-referendum lows of $1.1841 by Q4, a probability that's roughly

doubled since Boris Johnson took the PM position and committed the government to

a 'war footing' to take the UK out of the EU on or before Oct31, deal or not.