LONDON, March 5 Reuters Sterling39;s meandering performance against the dollar could get a jolt this week as Britain39;s finance minister faces pressure to cut taxes, but with the gilt turmoil of September 2022 still fresh in the mind, prudence may be the order of the day.

The pound has traded in a narrow 1.25011.2825 range against the dollar since the middle of November, while volatility is close to its lowest since February 2020, just before the COVID19 pandemic struck markets.

But Jeremy Hunt39;s Spring Budget on Wednesday might cause sterling to stir, as the ruling Conservative Party39;s hopedfor fiscal space that was meant to bring large tax cuts before a probable 2024 election might be less than previously thought.

Britain39;s economy fell into recession in the final quarter of 2023, while the market39;s repricing of Bank of England BoE rate cuts has seen borrowing rates move higher in recent weeks, limiting Hunt39;s fiscal headroom.

We don39;t have as much of a positive outlook as we had at the end of the Autumn Statement, Hunt told the Sunday Telegraph.

And with former Prime Minister Liz Truss39;s disastrous minibudget not yet out of the rearview mirror, markets are acutely aware of what can happen when the government promises sweeping, unfunded tax cuts.

Britain39;s gilt market went into a tailspin 18 months ago, prompting intervention from the BoE, while the pound slumped to a record low against the dollar.

SCOPE FOR A SURPRISE?

Analysts are not…