GBP/USD to mull a push to the 1.40 level – Westpac

GBP/USD is moving sideways around mid-13700s. Despite cable dipping below 1.3750, a push to 1.40 anticipated range resistance could still develop, according to economists at Westpac.

Risk of early hike to persist on confirmation of improved growth forecast 

“UK’s Autumn Budget proved to be more generous than expected, despite multiple detailed leaks. However, the Office of Budget Responsibility (OBR) forecasts lower Govt. debt and issuance due to firmer growth, lower unemployment and much improved Govt. revenue.” 

“Growth (6.5% in ‘21, 6.0% in ‘22) and inflation (2.3% in ‘21, 4.0% in ’22, remaining at 2.0% or above through the forecast period) are high. Though yields are lower, on lower debt burdens, if BoE updated forecasts reflect these improvements, risk of an early hike will persist.” 

“Despite GBP/USD dipping below 1.3750, a push to 1.40 anticipated range resistance could still develop.”