US: MNI POLITICAL RISK - Trump Weighs Ground Operations In Iran

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• President Donald Trump will participate in a Black History Month event at 14:00 ET 19:00 GMT, before participating in what the White House calls ‘signing time’ at 16:00 ET 21:00 GMT and a policy meeting at 16:30 ET 21:30 GMT. Press Secretary Karoline Leavitt will brief reporters at 13:00 ET 18:00 GMT.
• Trump will deliver remarks on the economy and affordability in Georgia tomorrow.
• The US carried out three more lethal strikes on alleged drug boats in the Eastern Pacific and Caribbean.
• Energy Secretary Chris Wright warned the US could withdraw from the International Energy Agency unless the organisation scales back climate advocacy.
• Japan plans to invest USD$36 billion in energy and critical minerals projects in Texas, Ohio, and Georgia, as part of the US-Japan trade agreement.
• Iranian and US officials touted progress after a second round of indirect nuclear talks in Geneva, but there is little to suggest either side is prepared to compromise on 'red lines' as tensions increase.  
• Senate Democrats plan to force a vote on a resolution terminating Trump’s tariffs on Canada when Congress returns next week.
• There is no sign of progress on a Ukraine peace deal after a second day of trilateral talks wrapped up after two hours this morning.
• A White House official dismissed Democrats' latest offer to end the DHS shutdown.
• Poll of the Day: Democrats have a 7-point lead over Republicans in the generic Congressional ballot.

Full Article: US DAILY BRIEF

• Secured Overnight Financing Rate (SOFR): 3.71% (+0.05), volume: $3.254T
• Broad General Collateral Rate (BGCR): 3.67% (+0.03), volume: $1.350T
• Tri-Party General Collateral Rate (TCR): 3.67% (+0.03), volume: $1.325T
• (rate, volume levels reflect prior session)

GBP's modest strength and intraday recovery today comes despite the CPI print clearing the way for higher odds of BoE easing this year (50bps of rate cuts in 2026 are now fully priced for the first time), and serves as a reminder for markets that GBP downside, particularly against USD, may be limited on the basis of BoE policy alone.

• Activity across options markets has favoured further GBP downside so far this week. GBPUSD put volume is close to double that seen across calls in trades covering the reaction to the inflation and jobs prints this week, but traded put strikes really begin to thin out below 1.3400 - suggesting contained expectations of protracted downside in the pair.
• This is further reflected in the contained response in the belly of the GBP risk reversals curve this week, with 3m contracts trading broadly inline with the longer-term running average (and higher than the beginning of last week), meaning those seeking downside via options are facing costs broadly comparable with pre-data levels. In fact, adding a knock-out barrier at 1.3331, the YTD low, to a one-month ATM put cheapens the position from 106 dollar pips to just 22. 

We see GBP as remaining structurally volatile in both the near- and medium-term, as evidenced by the premium in the GBP implied/realised vol ratio against the broader G10 FX average: 

Source: MNI / Bloomberg Finance L.P.