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The British economy advanced 0.5 pct on quarter in the three months to September of 2016, slowing from a 0.7 pct expansion in the previous period and in line with the preliminary estimate. Net external demand was the main driver of growth, while household expenditure and fixed investment rose at a slower pace.
However, the PMI has provided a first taster. The construction PMI in the UK increased to 52.80 in November from 52.60 in October of 2016. Construction PMIs in the UK averaged 51.85 from 2008 until 2016, reaching an all-time high of 64.60 in January of 2014 and a record low of 27.80 in February of 2009.
While Services PMI in this region increased to 55.20 index points in November from 54.50 index points in October of 2016.
GBPJPY has broken major resistances amid recent rallies, more rallies seem likely upon breach above 138.831 (refer weekly chart), bullish SMA crossover, next see stiff resistance towards 150 levels.
In the recent times, GBP vols skews normalized too much after the Brexit votes, the GBP volatility market normalized sharply (you could observed that in GBPJPY IV skews) which is quite favorable for OTM option writers. The liquidity recovered and the extreme positioning was ultimately absorbed. The price action is not taking the direction of an imminent new trend. As a result, the option market aggressively unwound smile positions.
Major downtrend and short-term upswings into consideration, anyone who wishes to carry long GBPJPY exposures, a collar options trading strategy is recommended. This could be constructed by holding the total number of units of the underlying spot FX while simultaneously buying the protective put and shorting call option against that holding. The puts and the calls are both OTM options having the same expiration month and must be equal in the number of contracts.
The collar is a good strategy to use if the options trader is writing covered calls to earn premiums but wish to protect himself from an unexpected sharp drop in the price of the underlying security.
Technically, the collar strategy is the equivalent of an OTM covered call strtegy with the purchase of an additional protective put.
