Implied volatility in EUR/GBP has spiked as markets adopt a cautious stance ahead of tomorrow’s UK Budget, according to ING FX strategist Francesco Pesole. The pair is expected to trade around 0.880 unless new developments emerge.
Markets Cautious Ahead of Budget Announcement
Pesole notes that one-week implied volatility in EUR/GBP is currently 3 points above realised volatility, marking the largest gap since the UK’s 2022 Mini-Budget. Despite some recovery in long-dated gilts, currency markets remain on edge ahead of the fiscal announcement.
For today, EUR/GBP is likely to hover near 0.880 as investors adopt a wait-and-see approach. However, any pre-Budget leaks or media speculation could shift sentiment and move the market, a risk Pesole describes as “non-negligible.”
