Sterling under pressure after Moody's cuts UK's AAA rating

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thenews
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thenews  

The pound came under pressure on Monday as currency traders reacted to the UK's loss of its top AAA credit rating.

Having fallen to a two-and-a-half year low against the dollar and a 16-month low against the euro, sterling showed signs of recovering by midday.

But the downturn resumed amid reports that traders were shorting the pound - betting it would fall further.

Chancellor George Osborne will comment on the downgrade to MPs later after Labour was granted an urgent question.

Ratings agency Moody's cut the UK's credit rating on Friday, the first cut since the 1970s.

Despite initially falling in Asian trading, the pound pared losses by Monday lunchtime, while the FTSE 100 was trading 0.7% higher.

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thenews
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thenews  

U.K. vows to stick with austerity

The U.K. government pledged to stick to its program of austerity even as sterling extended a recent slide Monday after the country was stripped of its AAA credit rating.

Moody's cut its rating to Aa1 late Friday, saying growth would remain weak into the second half of the decade, making it harder for the government to deliver on its debt-cutting targets and undermining the ability of the U.K. to withstand future shocks.

"Britain has to stick to the course, and we will," finance minister George Osborne wrote in The Sun newspaper on Sunday.

"For we've had a stark reminder this weekend of the single most important truth about our economy -- Britain has a debt problem, built up over many years, and we have got to deal with it."

Moody's said it expected the U.K.'s debt to peak at 96% of gross domestic product in 2016, up from around 90% today.

A downgrade had been talked about for months, against the backdrop of a deepening recession in Europe and Osborne's acknowledgment late last year that borrowing would remain higher for longer than expected.

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joe blogs
868
joe blogs  

Until they are booted out

Only just over 2 yrs left and counting down

the UK has a chancellor that has never studied economics,

His CV reads

Oxford where he edited a magazine and achieved a 2nd in modern history

NHS - Data entry clerk in the morgue

Selfridges where he stacked shelves

Tory HQ

MP for Tatton since 2001

Shadow chancellor since 2004 (Hague originally turned down the position as did Cameron

he was 3rd choice for the role)

Ozzy Osbourne could do a better job

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