The Pound Sterling (GBP) is trading marginally higher while Gilts remain soft (but off earlier lows) in the wake of Wednesday’s budget, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

GBP steadies after post-budget slide

“Markets continue to think a 25bps reduction in the BoE’s target rate on November 7th is likely but expectations have been pared back to 80% risk of a cut next week.”

“The GBP got roughed up on Thursday but price action suggests the pressure is abating. A solid rally off the intraday low yesterday put in a bug, bullish “hammer” pattern on the intraday chart, delivering some grinding gains for the pound which is keeping the intraday range today well inside yesterday’s—a clear consolidation signal.”

“Major support is developing now around 1.2840. Resistance is 1.2940/45 and (stronger) 1.30.”