Risk reversals imply negative sentiment on sterling

LONDON – Implied volatilities for sterling have crept higher and options traders say the market is taking a negative view on the pound, as concerns about the fiscal condition of the UK and the possibility of a hung parliament after a general election later this year have spooked markets.

"Sterling-related volatilities are now the most expensive of the G-10 space, both compared with other implied volatilities and their own historical volatilities," said Lorenzo Ravagli, a quantitative strategist