Moodys Downgrades Pound, Heightening Traders Fears
THE TAKEAWAY: UK Government Bond downgraded by Moody’s > Investor's fears are confirmed and pound falls sharply > GBP Outlook Bearish
Moody’s Rating agency downgraded the UK’s Government bond rating from Aaa to Aa1 at 9:30pm GMT on Friday, sending the pound falling towards the FX market’s close. The sterling, which had been trading slightly lower on the day, fell approximately .0088 Pips against the dollar following Moody’s announcement, with the GBP/USD closing at 1.5163.
Over the last few months, the pound has faced major pressure as investors have become more and more worried over Britain’s ability to retain some econmic growth in the face of significant austerity measures. These fears appear to be confirmed in the form of a major credit downgrade, which should cause the cost of government borrowing/spending to increase, while overall faith in the currency continues to fall. Today's news may only be the start of negative economic signs for the UK and the pound, which has the weekend to relax before more likely turbalence on Monday.
GBP/USD (1 Day Chart)
Chart Created usingMarket Scope– Prepared byJason Shemtob
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