Sell GBPJPY 3m Risk Reversal

Against the backdrop of a falling dollar, the GBP has underperformed most G10 currencies since the start of the year. The BOE's high key interest rates limited the GBP's further correction. For its part, the JPY recorded the best performance, supported by the BOJ's rate hike and the fall in US long rates. GBP/JPY fell significantly to 187 before recently returning to 190.6. We believe that the potential for further GBP/JPY appreciation is low, while a further downward correction to 185 remains likely in the coming months. In this environment, we believe it is more attractive to sell a 3-month 25D risk reversal.