Signs of Stabilisation

GBP is one of the better performers in G10 early Wednesday (helped by the generally weaker USD), with GBP/USD looking to clock three consecutive sessions of gains. The 50-dma cuts in as first resistance at 1.2986 ahead of the Sep10 high at 1.3035.

The subsiding negativity is evident in GBP options markets today, with front-end risk reversals contracts bouncing off the lows after a protracted drop across early September.

1-week GBP vols still trade at a premium as the contract captures this Thursday's BoE Decision, but implied vols have subsided from highs seen late last week. One-week currently crosses at 10.4 points vs. the 14 points seen on Friday.

Much of the driver of the pullback in vol may be stemming from signs that the government could soften their stance on the controversial Internal Market Bill after a number of key ministers voiced their opposition at debate on Monday. The Times states that Johnson assured Conservative rebels "that he was willing to act on their concerns before detailed debates on the proposals next week."