British Pound: Why is Budget risk limiting the Pound’s recovery? – Scotiabank

Caution ahead of Wednesday’s UK budget is weighing on the British Pound (GBP) against the Dollar, according to Scotiabank strategists Shaun Osborne and Eric Theoret. Although overnight GBP/USD volatility has firmed, a fiscally credible budget package is expected to have a neutral impact on the Pound. With GBP/USD trading below minor technical support, the strategists flag the risk of a retreat towards 1.3250–1.3275 before bargain-hunters step in.

Is Budget Event Risk Weighing on Sterling?

"Caution ahead of Wednesday’s UK budget accounts for some of the GBP’s softness against the USD."

"Overnight GBP/USD vols are firmer, reflecting caution ahead of Chancellor Healey’s set-piece delivery tomorrow but a budget that maintains fiscal credibility will likely be GBP-neutral at worst."

"The GBP retains a soft undertone versus the USD, driving spot below minor support at 1.3350/55."

"That leaves the October 19th low at 1.3300 exposed and lifts the risk of the pound easing back to the 1.3250/75 range to retrace a little more of its mid-month rebound."

"Modest GBP losses should entice support from bargain-hunters."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)