Sterling down on negative credit rating

Sterling down on negative credit rating

11-11-2009 06:09

The Pound Sterling declined against the majority of the 16 most popular currencies as Fitch Ratings, the international credit rating agency, stated that Great Britain’s monetary system is still one of the weakest among the industrialized countries, shunning investors away from Pound-priced assets.

Negative credit rating

Fitch Ratings, with headquarters in New York and London, declared that the credit situation in the UK is one of the most delicate among the wealthiest countries, indicating that the nation requires an extensive budget adjustment in order to create stabilization. Standard & Poor’s, one of the most respected financial institutions worldwide, also emphasized that the credit situation in Great Britain remains alarming, and a downgrade on British investment rating could be possible, shifting attractiveness out of the United Kingdom, which has been facing consecutive pessimistic economic events in the last period.

Evade Pound-priced positions

Currency analysts believe that a downgrade on the UK credit rating will have a major influence on the Sterling’s movements, given the fact that the psychological effects will have a more extensive impact, causing traders not only to evade Pound-priced positions but also equities and general investments in the nation.