GBP/USD to head lower for a test of the 1.35 level – Westpac
|The strength of the US DOllar Index points to risks. Economists at Westpac see further tests and a possible break of 1.35 before strength returns later in the second quarter.
The degree to which crowds behave themselves on beaches and parks over the holiday weekend will be a focus
“The combination of a burst of warm weather, the first stages of reopening in England, the Easter holidays and the prospects of more easing of restrictions in non-essential retail in coming weeks should help lift sentiment towards the pound through Q2. And this should remain in stark contrast to the developing lockdown situation in France and across Europe.”
“The UK Govt. continues to warn of a third wave of the pandemic if variant infections from overseas take hold. So the hope is that Matt Hancock’s ‘don’t blow it’ warning is heeded this holiday weekend.”
“This more positive domestic backdrop should leave the GBP well supported on dips towards 1.35, and continued outperformance versus EUR appears locked and loaded.”
“The strength of DXY points to risks; we see further tests and a possible break of 1.35 before strength returns later in Q2.”
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