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(Repeats Wednesday's story without text modification)
* The highest sales ratios since July 2016
* Investors focus on the critical points of December and March
* The pound is trading near the 15-month low against the dollar
By Tommy Wilkes
LONDON, Oct. 31 (Reuters) – Traders have a more negative view of the sterling outlook than ever since shortly after the 2016 Brexit referendum, according to options markets, as fears grow that Britain is heading for a sudden and disruptive crisis out of the European Union.
Financial options are known as risk reversal – the measure of demand for options giving investors the right to sell sterling at a later date compared to the options giving them the right to sell. Buyers – traders are increasingly worried about the fall of the pound between December and April.
Fears of a non-agreement on Brexit have intensified as talks for an agreement between London and Brussels on the terms of their divorce were deadlocked.
The British pound came close to $ 1.27 on Tuesday close to 15 months after Standard & Poor's warned Britain that it was facing a long recession with a Brexit without a deal. The currency slightly recovered on Wednesday.
Even if Britain reaches an agreement, Prime Minister Theresa May will have to get parliamentary approval – far from guaranteed, her conservative party having no majority and factions of her party opposing her approach.
Any delay would leave Britain dangerously close to the scheduled date for his departure from the EU on March 29.
And a parliamentary rejection could plunge the UK into a sudden and disruptive exit, wreaking havoc on the economy as the UK fell back on the rules of the World Trade Organization for trading with the United Kingdom. the EU, its biggest trading partner.
Paul O'Connor, head of the British multi-asset team at Janus Henderson, said any relief from the pound would be short-lived if the EU and Britain agree on an agreement at a summit special in November.
The arithmetic does not favor an agreement by May by parliament, he said. A failure at the first attempt would trigger weeks of "acrimonious postures, vivid techniques, threats, concerns about a leadership race, a general election, Jeremy" Corbyn ", while the liquidity has cleared up at the end of the year, he added. Corbyn is the leader of the Labor opposition party.
"So it is quite plausible that we go to Christmas with a first vote that failed and the goal of the second attempt was something to consider for the New Year. It's not great, "he said, adding that he hoped Parliament would reach an agreement.
STRESS SIMILAR TO 2016
Investors use option markets to speculate on the direction of a currency and companies to protect against adverse movements.
According to FENICS data, this month's three- and six-month risk reversals reached their highest level since July 2016, shortly after the referendum vote in June. This indicates a greater demand for put options (right to sell sterling) compared to the purchase options (right to buy).
Simon Derrick, BNY Mellon's chief currency strategist, said the six-month risk inversion pricing "indicates a level of stress similar to that seen in the market in February 2016 when the referendum campaign began to heat up" .
The month-over-month risk recoveries, however, are at their highest level since June 2017, suggesting investors are not as panicked by the pound's near-term outlook as by the outlook for the year. horizon 2019.
Implied volatility – expectations of expected price fluctuations in the pound sterling – is also increasing.
There are also signs of increasing stress on the options markets for sterling trading against the euro.
The three- and six-month risk reversals led this month to the levels reached in August, when the bearish sentiment of the pound sterling reached its highest level since October 2016.
Additional report by Helen Reid
Edited by Peter Graff
