Capital.com analyst Daniela Hasson said downside risk to gilts and sterling from
Wednesday’s UK budget is larger than any potential upside if fiscal measures
reassure markets. Markets have been relatively calm ahead of the announcement,
implying expectations of cautious fiscal policy. If the budget soothes doubts,
gilt yields could fall and sterling receive support, but upside may be limited
because markets already price in mild outcomes; conversely, disappointing fiscal
forecasts could trigger a markedly larger negative reaction.
