GBP/USD 3-month risk reversals hit 1-month high after BOE

• GBP/USD three month risk reversal rises despite dovish BOE rate hike.

The three-month risk reversals rose to -0.75 today; its highest level since Oct. 4. It has been rising steadily from the Oct 6 low of -0.975. Meanwhile, pre-BOE, it stood at -0.775.   

Risk reversals chart

Though negative, a sustained in the risk reversals gauge indicates falling demand for Put options (bearish bias is weakening). The rise to one-month high seen today indicates the BOE-led sell-off in Cable could be short lived.