Sterling Volatility Sends Warning Signs Ahead of UK Budget

The UK pound's unusual calm is sending warning signs to traders ahead of Prime Minister Andy Burnham's first Budget, according to Bloomberg. A measure of sterling volatility is flashing red flags that markets may be too complacent in the run-up to the fiscal plans.

One-month pricing for the UK pound against the euro is hovering near last week's record low, while the two-month tenor remains close to its trough from August. This period captures when the government will set out its fiscal plans.

The unusual calm in the pound is a concern for traders as it may indicate that markets are not pricing in enough uncertainty or risk. This could lead to unexpected market movements once the Budget is announced.