British Pound: Budget risk caps Pound recovery – Scotiabank
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.
Scotiabank analysts Shaun Osborne and Eric Theoret warn that the British Pound (GBP) is likely to remain weaker against the US Dollar due to market caution surrounding the upcoming UK budget. Although overnight GBP/USD volatility is higher, they expect a fiscally credible package from Chancellor Healey's budget to be neutral for the Pound.
Technical analysis shows the GBP/USD pair trading below minor support, with risks of a pullback to the 1.3250–1.3275 area before any potential bargain-hunting. As markets await the UK budget on Wednesday, the GBP's softness against the USD is partly due to caution. The pair has fallen to the October 19th low of 1.3300, exposing it to a risk of slipping further to the 1.3250/75 range. Should the GBP experience modest losses, bargain hunters may step in for support.
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