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2026-02-17 00:45:35
[Investors Believe UK Political Risk Has Diminished, But Is Far From Gone] Convera's Antonio Ruggiero noted in a report that while the pound has stabilized, options market investors continue to buy hedging instruments to mitigate the risk of a prolonged depreciation due to persistent political concerns. He stated that the political risk premium for the pound has decreased after cabinet ministers endorsed Prime Minister Keir Starmer. Risk reversal data shows that the tendency for short-term call options betting on euro appreciation against the pound has declined more than long-term options. This indicates that investors still anticipate political turmoil, but are now more inclined to hedge against the risk of a prolonged pound weakness. He stated, "In short, investors believe political risk has diminished, but is far from gone." The euro fell 0.1% against the pound to 0.8687.
