Forex Flash: EUR/GBP could push higher towards 0.89/9000 – Westpac (Barcelona) - According to Robert Rennie, an FX Strategist at Westpac, “It’s hard to see strong arguments for a lasting negative impact on the GBP. However, with the growth/ debt consolidation/ shock absorption issues that Moody’s raised, plus political risks/ concerns the Government’s resolve may start to waiver plus question over what changes, if any, the new BoE Governor may make to the outlook for the Bank’s QE program, risks still look to be on the downside.”

Indeed, the GBP looks as if it can push sub 1.5000 as the currency looses the ‘safe haven’ status gained through last year’s European crisis. Additionally, “the EUR/GBP can trade as high as 89/90 if nothing untoward emerges from the Italian elections. However, at these levels sterling starts to look very cheap to us and our interest in beginning to buy GBP on crosses will rise. While GBP may fall a bit further, weighed down by Moody’s blues, the fact it has slid by some 7% versus the US$ so far this year argues against this being the beginning of a new secular trend.” Rennie adds.