As risks in the Eurozone and the UK began to influence market demand, the cost of hedging fluctuations in the EUR/GBP exchange rate rose to a high of nearly two months. The implied volatility of EUR/GBP for the January period rose 25 basis points to 3.59%, the highest level since August 3. The indicator rose for the fifth day in a row, but overall it was still relatively low, averaging 3.75% during the year. The term premium was extended to 84 basis points, the actual volatility remained low, and the term premium was near the upper end of the range since mid-May. The January option now covers two major events: the UK budget bill and the ECB policy decision. The trend of traders bullish on the euro continues to grow; the EUR/GBP risk reversal indicator rose to 45 basis points, and the premium for bullish options is higher than for bearish options, which is expected to hit the strongest closing level since the beginning of July.

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