This week's spell of above-average.........>

STERLING: This week's spell of above-average currency hedging volumes continues,

with GBP markets leading the way as both GBP/USD and EUR/GBP activity sits well

ahead of average. 1m GBP/USD risk reversals touched their lowest levels of the

year Wednesday, with the equivalent EUR/GBP contract following suit.

-Nonetheless, some of the larger GBP/USD options trades so far today have been

bullish, including what appears to be a 1.34/1.36 call spread for a total

notional of over GBP350mln expiring on Feb15, the day after the next showdown

for PM May in the House of Commons.

-This is also the case for EUR/GBP, with some of the most notable trades

seemingly bullish on GBP while retaining a short expiry. One of the larger

trades includes a bearish 0.85/0/86 EUR/GBP put spread, which traded for a total

notional of E400mln and expires on Feb13. The structure would break even at

around Gbp0.8590.