GBP/USD: Brexit draft deal reached, still the demand for sterling puts (bearish bets) continues to rise

• Prime Minister May has won the backing of the cabinet for her Brexit plan.
• Investors are still seeking protection (GBP puts) against long GBP/USD positions.

The demand for GBP puts continues to rise despite the Brexit draft deal.

The GBP/USD one-month 25 delta risk reversals (GBP1MRR) are currently being paid at 1.4 GBP puts vs 1.225 GBP puts yesterday. The implied volatility premium for the GBP puts stood at 0.8 nine days ago.

The rise in the value (or demand) for the put options indicates the investors are likely worried that the draft, which has 586 pages, may not pass through parliament, leading to a sharp drop in the GBP.

GBP1MRR