British Pound: Budget risk limits recovery – Scotiabank

1.3250–1.3275 is the potential pullback zone for GBP/USD, say Scotiabank strategists Shaun Osborne and Eric Theoret. With the pair below minor technical support, they see scope for further losses before bargain-hunters step in. The British Pound (GBP) is weaker against the Dollar as caution builds ahead of Wednesday’s UK budget. Overnight GBP/USD volatility has firmed, although a fiscally credible package is expected to have a neutral impact on the Pound.

1.3350/55 support break leaves Sterling subdued ahead of UK budget

"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.)