What's on the schedule today?
- 15:30 MSK - UK annual budget. This is the country's main financial document: taxes, spending and the government borrowing plan for the year ahead. Importance on the calendar - high.
- 21:00 MSK - Fed rate decision. Then Fed Chair Kevin Warsh speaks.
On the Fed, expectations are clear. The range is 3.75-4.00%, and according to CME FedWatch, 92.8% favor holding the rate. Both events are in the economic calendar.
Why is the budget the main risk?
There is no digital consensus on the budget. Healey is squeezed between three forces at once.
- Costly servicing of government debt - there's no saving on that.
- A large tax increase - her predecessor Rachel Reeves already delivered it.
- Pressure from households and businesses - it demands easing.
Where is the pound now?
Support didn't hold. The pound broke through the minor level of 1.3350/55 and moved to 1.3300.
- 1.3350/55 - broken minor support.
- 1.3250-1.3275 - pullback risk zone.
- around 1.3390 - the 100-day average, resistance above.
**Shaun Osborne and Eric Theoret, Scotiabank strategists: caution ahead of the budget explains part of GBP's weakness against the dollar, and the pullback risk is the 1.3250-1.3275 zone.
Options are pricing in movement.* Implied volatility for the pair over the next 24 hours has risen. This is the market's estimate of the size of the move, built into options.*
What next?
There are two scenarios by magnitude. Neither predicts direction.
- A: the budget preserves confidence in public finances. According to Scotiabank's assessment, for the pound this is at worst a neutral outcome. The main volume then shifts to the evening, to the Fed.
- B: borrowing and taxes deviate from expectations. The move in GBP starts right from 15:30. In the evening a second wave from the Fed is layered on top.
The Bank of England adds rigidity. A signal comes from there against an imminent rate cut: the slowdown in wage growth has stalled, and leading indicators point to around 3.5%.
Trading conditions during such hours are different for each program - they can be seen in the prop firm catalog.
Will you hold a position from 15:30 to 21:00?
There are five hours between the two windows, and the temptation not to close the position is obvious. But only some prop firms spell out holding through a data release as a separate line. This means reduced leverage during these hours, a ban on holding through a central bank head's speech, and calculating the daily loss by the maximum within the day. Such points are read in the terms of a specific program, not guessed from a banner. Checking before a day like this costs five minutes.