GBP/USD: Dip below 1.3550/1.36 to add to near-term risks – Westpac

GBP/USD started to move sideways above 1.3600 on Thursday. According to economists at Westpac, a dip back below 1.3550/1.36 is a clear risk into next week though that likely presents a buying opportunity for further gains in the months ahead.

Sue Gray’s report may be released early next week

“No date has been confirmed, but the Sue Gray ‘partygate’ investigation report may also be released this weekend/early next week.”

“With another hike fully priced for the March BoE meeting and return to work likely to lift activity strongly through Q1, we see GBP outperformance story continuing.”

“The speed with which the pound has recovered from sub 1.32 early December to crack the top end of a six-month downtrend at circa 1.36 last week leaves us concerned that we may see a near-term correction.”

“A dip below 1.3550/1.36 would add to near-term risks, especially given the possibility of a hawkish FOMC next week and a UK leadership challenge.”