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Overnight Vols See Support As Contracts Capture BoE, NFP

GBP
  • Overnight GBP vols back above 12 points ahead of the BoE as the contract captures both today's BoE decision as well as the Friday NFP release. Markets now price a 60-65 pip break-even on an overnight GBP/USD straddle, with hedging activity so far this week favouring downside protection: around $3 in GBP/USD puts have traded for every $2 in calls since Monday.
  • Spot has been largely in consolidation mode this week, however the trend outlook remains bearish and attention is on 1.2037, Oct 4 low and bear trigger. The options-implied market probability for the pair to trade below the bear trigger at year-end, however, has moderated as spot trades within a range: 30.1% as of today vs. 38.2% a week ago, and 42.3% at the beginning of October.
  • Full MNI BoE Preview found here: https://roar-assets-auto.rbl.ms/files/56589/MNI%20...

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