Forex News – UK loses AAA rating after Fitch downgrades
April 19, 2013 5:41 pm
Sterling is weak against the dollar on Friday after the United Kingdom lost its coveted triple-A credit rating after being downgraded by Fitch Ratings agency.
Fitch is the second ratings agency to cut the UK top-notch rating, as it cited citing a weaker economic and fiscal outlook, and lowered the rating by one notch to AA plus.
Moody’s was the first agency to downgrade Britain, in February, and Standard & Poor’s has said there is at least a one-in-three chance it will also downgrade the UK’s rating.
GBPUSD dropped to $1.5224 by 5pm London time compared to around $1.5250 before the Fitch announcement.
The following are comments from Fitch:
“The downgrade of the UK’s sovereign ratings primarily reflects a weaker economic and fiscal outlook and hence the upward revision to Fitch’s medium-term projections for UK budget deficits and government debt. Despite the loss of its ‘AAA’ status, the UK’s extremely strong credit profile is reflected in its ‘AA+’ rating and the Stable Outlook.
– Fitch now forecasts that general government gross debt (GGGD) will peak at 101 percent of GDP in 2015-16 (equivalent to 86 percent of GDP for public sector net debt, PSND) and will only gradually decline from 2017-18. This compares with Fitch’s previous projection for GGGD peaking at 97 percent and declining from 2016-17 and the ‘AAA’ median of around 50 percent. “
Sterling is weak against the dollar on Friday after the United Kingdom lost its coveted triple-A credit rating after being downgraded by Fitch Ratings agency.
Fitch is the second ratings agency to cut the UK top-notch rating, as it cited citing a weaker economic and fiscal outlook, and lowered the rating by one notch to AA plus.
Moody’s was the first agency to downgrade Britain, in February, and Standard & Poor’s has said there is at least a one-in-three chance it will also downgrade the UK’s rating.
GBPUSD dropped to $1.5224 by 5pm London time compared to around $1.5250 before the Fitch announcement.
The following are comments from Fitch:
“The downgrade of the UK’s sovereign ratings primarily reflects a weaker economic and fiscal outlook and hence the upward revision to Fitch’s medium-term projections for UK budget deficits and government debt. Despite the loss of its ‘AAA’ status, the UK’s extremely strong credit profile is reflected in its ‘AA+’ rating and the Stable Outlook.
– Fitch now forecasts that general government gross debt (GGGD) will peak at 101 percent of GDP in 2015-16 (equivalent to 86 percent of GDP for public sector net debt, PSND) and will only gradually decline from 2017-18. This compares with Fitch’s previous projection for GGGD peaking at 97 percent and declining from 2016-17 and the ‘AAA’ median of around 50 percent. “
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