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10 Apr 2015
GBP: Post-election dated currency option volatility soars to multi-year highs – Investec
FXStreet (Barcelona) - Jonathan Pryor, Head of FX dealing at Investec, comments that uncertainty surrounding UK election outcome risks fuelling volatility in the pound, and further adding that investors have started buying insurance against any sharp upswings in GBP.
Key Quotes
“..it appears the journalists at the Financial Times must have been reading some of the articles from Investec's General Election page! This morning the FT wrote a front page article highlighting "Uncertainty over the outcome of the most closely fought general election in a generation has prompted signs of concern in financial markets, with investors buying up insurance against sharp swings in the value of the pound"... a view the Investec trading desks has held for a while.”
“The FT go on to highlight post-election dated currency option volatility has soared recently with "the sterling-euro pair (at) its highest level since 2010" and "the sterling-dollar pair soared more than 21 per cent...(to) its most elevated levels since September 2011".”
“The article notes longer term volatility, such as one year out, has seen little effect which they believe highlights any potential EU referendum is not a concern for now.”
“As the general election campaign continues to create uncertainty of outcome, there is certainly a risk of further volatility and potential Sterling weakness to come over the next few weeks.”
Key Quotes
“..it appears the journalists at the Financial Times must have been reading some of the articles from Investec's General Election page! This morning the FT wrote a front page article highlighting "Uncertainty over the outcome of the most closely fought general election in a generation has prompted signs of concern in financial markets, with investors buying up insurance against sharp swings in the value of the pound"... a view the Investec trading desks has held for a while.”
“The FT go on to highlight post-election dated currency option volatility has soared recently with "the sterling-euro pair (at) its highest level since 2010" and "the sterling-dollar pair soared more than 21 per cent...(to) its most elevated levels since September 2011".”
“The article notes longer term volatility, such as one year out, has seen little effect which they believe highlights any potential EU referendum is not a concern for now.”
“As the general election campaign continues to create uncertainty of outcome, there is certainly a risk of further volatility and potential Sterling weakness to come over the next few weeks.”