GBP/USD: Trades a little softer before first budget - Scotiabank

The Pound Sterling (GBP) is trading a little softer ahead of Chancellor Reeves' first budget (8.30ET) for Labour. The broad outlines of the government's fiscal plans have been flagged to the media and markets, Scotiabank's Chief FX Strategist Shaun Osborne notes.  

GBP slips ahead of Labour government's budget

"The anticipated mix of tax hikes and increased borrowing to invest in key policy priorities (health and infrastructure, for example) is getting scored as growth-positive by the Office of Fiscal Responsibility. The mix of growth enhancing fiscal policy plus tighter BoE monetary policy may be GBPsupportive in the medium term--assuming markets find Reeves' plans credible."

"GBP's drop back from the intraday high in the low 1.30s leaves a negative look to the short-term chart via a bearish outside range session on the 6-hour chart. The drop interrupts the grinding improvement in Cable seen since last week's rebound from the low 1.29 area and risks renewing downside momentum in the pound--if sustained over the session."

"Support is 1.2940 and 1.2900/10. Resistance is 1.3025."