GBP/USD to challenge the 1.40 mark as covid developments look hopeful – Westpac

The GBP/USD pair is now inching towards the 1.40 level as further tentative signs of improving case counts/hospitalisations adds to the sense that further strength may be building, economists at Westpac report.

See: GBP/USD to surpass 1.40 if BoE hawks win the battle – SocGen

Modest slowing in hospital admissions adds to hope for UK recovery

“Today’s Bank of England’s MPC meeting may see a small step towards beginning a path to tightening though the confluence of the ongoing ‘pingdemic’ drag on the services sector, versus the coming boost from waning case count/slowing hospitalisation rate and reopening means MPC is unlikely to alter guidance until it meets again in late September.” 

“The fairly sizeable drop in the services PMI suggests that staffing impacts have been significant so we will have to wait until August 16 to see whether disruptions can indeed be reduced by dialling down the test and trace app. However, the UK administration will be watching the very recent evolution of case count and hospitalisation with some optimism in recent days.” 

“Cable’s test up towards 1.40 late July quickly ran out of steam though as long as we remain above 1.3850, technicals point higher and the recent slight drop in hospital admissions adds to that more upbeat view.”