Sterling options vol hits highest in a year ahead of BoE
LONDON, July 31 (Reuters) -Sterling options volatility exploded to its highest in almost a year on Wednesday, reflecting the degree of trader nervousness ahead of a Bank of England rate decision where the chances of a cut are up in the air.
Implied overnight options volatility - a measure of demand for protection from big near-term price swings - hit 12.13%, the most since August last year and marking its biggest one-day rise since last June, according to LSEG data GBPONO=R
The pound itself GBP=D3 was trading steadily, at $1.2836.
Market pricing around the outcome of the BoE meeting on Thursday has swung wildly in the past few days and by early Wednesday was showing around a 60% chance of a cut 0#BOEWATCH.
Graphic: World FX rates in 2023 http://tmsnrt.rs/2egbfVh
Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv
Reporting by Amanda Cooper; Editing by Alun John
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