Fitch Ratings Pushes Down the Pound

By TraderVox.com

Tradervox (Dublin) – The Bank of England has been relentless in its efforts to revert the current economic trend in the UK. However, its efforts have been met with skepticism from analysts and politicians who do not believe in the viability of its plans. After disappointing results from the Jobless claims report yesterday, the Fitch Ratings have lend a blow to the sterling pound as it warned UK of losing its top investment ratings.

The sterling pound consequently fell against eleven of its sixteen major peers. Fitch changed its rating to negative citing the current huge debt levels and the weak recovery. This statement did not come as a surprise to many analysts as they had already expressed their concerns about the measures being taken to curb the negative economic situation in the country. Ulrich Leuchtmann a Currency Strategist at Commerzbank cites the monetary and fiscal policy as some of the factors that are haunting the pound for now.

The sterling pound declined by 0.2 percent against the euro to trade at 0.8327 at the start of New York trading session yesterday. Against the yen, the pound weakened by 0.3 percent to trade at 130.85 yen but remained little changed against the dollar at $1.5677.

In its statement, Fitch said that it had decided to change UK’s rating due to the limited fiscal ability to absorb further economic shocks and the elevated debt levels. The current weaker than expected economic recovery only added to the already existing fears of the county’s ability to absorb economic shock.

The decision by Fitch came barely a month after Moody’s Investor service warned the UK that it risked losing its top credit ratings due to the deteriorating economy. The UK is in economic turmoil, and unlike the euro area crisis, the efforts by the BOE are not receiving positive reception from some opposition politicians and analysts who claim that the BOE is trending on risky waters with its QE program.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox