UK pound saw a bit of a drop today in response to the recent downgrade for Britain’s credit rating. however, the loss of its triple-A rating hasn’t weighed too heavily on the pound, even though it has had an effect.
On Friday, Moody’s downgraded Britain’s credit rating from Aaa to Aa1. The downgrade came after the United Kingdom had outlasted the United States and France, both of which have already lost their triple-A ratings.
The news sent the UK pound lower in forex trading, but the currency has since regained some of its lost ground. Pound is higher against the US dollar right now, but lower against the euro.
Even though the pound seems to be holding up somewhat well — the downgrade wasn’t totally unexpected — there are still signs that long-term weakness is likely for the British currency. The Bank of England continues to keep with asset purchase programs, and the body seems unconcerned with pound weakness as long as the goal is to try to stimulate the economy.
At 15:30 GMT the UK pound is mixed in trading. GBP/USD is up to 1.5116 from the open at 1.5078. EUR/GBP is up to 0.8777 from the open at 0.8766. GBP/JPY is down to 142.2785 from the open at 142.5950.
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UK Pound Drops vs. Euro on Credit Downgrade
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