Geopolitical risks are compounded by interest rate meetings of central banks in many countries. The market tends to allocate long Gamma positions, and the relative premium to hedge against fluctuations in the pound remained high this week. The implied weekly volatility of GBP/USD rose to 6.76% last Friday, the highest since late July; the indicator was 6.02% when the London market opened. The spread between implied weekly volatility and realized volatility is 221 basis points, which is at the 97% quantile level for the past two years. The risk reversal indicator for this period is 28 basis points, and the premium for put options is higher than for call options; on September 3, the value was 55 basis points. Upcoming risk events include policy decisions of the Federal Reserve and the Bank of England, concerns about slowing growth in the artificial intelligence industry, and high oil prices.

Geopolitical risks are compounded by interest rate meetings of central banks in many countries. The market tends to allocate long Gamma positions, and the relative premium to hedge against fluctuations in the pound remained high this week. The implied weekly volatility of GBP/USD rose to 6.76% last Friday, the highest since late July; the indicator was 6.02% when the London market opened. The spread between implied weekly volatility and realized volatility is 221 basis points, which is at the 97% quantile level for the past two years. The risk reversal indicator for this period is 28 basis points, and the premium for put options is higher than for call options; on September 3, the value was 55 basis points. Upcoming risk events include policy decisions of the Federal Reserve and the Bank of England, concerns about slowing growth in the artificial intelligence industry, and high oil prices.