British Pound: Budget risk caps Pound recovery – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret say British Pound (GBP) is softer versus the Dollar as markets stay cautious ahead of Wednesday’s UK budget. Overnight GBP/USD volatility is firmer, but a fiscally credible package is expected to be neutral for the Pound. Technically, they see GBP/USD below minor support, with risks of a pullback toward the 1.3250–1.3275 area before bargain-hunting emerges.

Fiscal event risk keeps Sterling subdued

"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.)

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