EUR/GBP implied volatility spikes as markets adopt a cautious stance ahead of tomorrow’s UK Budget, with the pair expected to trade around 0.880 unless new developments emerge, ING's FX analyst Francesco Pesole notes.
"EUR/GBP one-week implied volatility is trading 3 vols above realised, which is the highest relative gap since the 2022 Mini Budget. This signals that despite some recovery in back-end gilts, the currency market remains concerned ahead of tomorrow’s UK Budget announcement."
"The pair may hold around 0.880 for today amid a wait-and-see approach. That is, unless some Budget anticipations appear in the media and move the market (a non-negligible risk)."