Pound Under Pressure: Volatility Jumps to Two-Month High Amid Bearish Bets

According to the latest data from the options market, GBP/USD is showing clear signs of increased risk and prolonged instability. One-week implied volatility has risen for the fifth consecutive session, reaching 8.69%, while option trading volumes have surged to their highest levels in nearly two months. Monthly volatility is also on the rise — at 7.92%, it’s on track to hit its highest level since mid-July.

This spike is driven entirely by accelerated demand for gamma hedging, primarily from investors placing bearish bets on the pound. The one-week risk reversal setup at +68 basis points marks the most bearish sentiment since July 17. Further confirmation comes from CFTC data, which shows that 60% of GBP/USD options have been positioned for a decline.

Expectations: The pound is expected to remain under pressure in the short term, especially around the release of key economic data. Current volumes and market sentiment suggest that participants are already positioning for a potential further decline of GBP against USD in the coming days.