The observatory says Typhoon Matmo will be at its closest to Hong Kong on Sunday morning, skirting more than 300 kilometres to the southwest of the city.

Forecasters said they were not ruling out a higher warning than the Strong Wind Signal Number 3 that was issued at 12.20pm on Saturday.

"In the past few hours, Matmo continued to move steadily towards the vicinity of Leizhou Peninsula and intensified. Local winds are strong over many places, with occasional gales offshore and on high ground," the observatory said in an update at 8.45pm.

"The observatory will closely monitor the distance of its gale force winds from the Pearl River Estuary and the change in local wind conditions, and assess the need for issuing higher tropical cyclone warning signals."

Occasional squally showers, thunderstorms and violent gusts were being predicted for Saturday night and early on Sunday, with members of the public warned to stay away from shorelines.