GBP/USD: Break above 1.40 to pave the way towards the recent 1.4235 high – Westpac

Positive vaccine rollouts and a more solid economic outlook suggest that GBP/USD dips should be short-lived. According to economists at Westpac, a close above 1.40 is needed to suggest early sterling gains. 

Key quotes

“BoE’s MPC is unlikely to alter key policies but is now seen as one of the least dovish major CB’s as the UK has pushed aside any risks of disorderly exit from the EU and has had a successful vaccine rollout so far.” 

“The latest BoE Agents Business Conditions is likely to show a further lift in both investment and employment intentions. Should this occur with a more positive MPC outlook, or even hints of a shift in forward guidance, markets would price more upside for UK rates and GBP.”

“GBP/USD remains range bound and though 1.38 held into the FOMC meeting, a close above 1.40 is needed to suggest a move to retest the recent 1.4235 high.”