Moody’s downgrade depresses pound

<p>Moody’s has downgraded the UK’s top credit rating, sending the pound lower.</p>

The pound has fallen lower in currency trading this morning (February 25th), as the markets react to the decision to revise down the UK's credit rating.

Moody's downgraded the country from the top AAA status on Friday evening – action that had been threatened for some time.

The pound fell to a 16-month low in trading with the euro after the decision was taken, while sterling plunged to a 31-month nadir versus the dollar.

This is the first time Moody's has cut the UK's top AAA rating since the 1970s, but the government has played down the news and the chancellor has denied that this means he needs to change his policies to bring about the economic recovery.

George Osborne commented: "It's going to take several more years of this in order to get back not just our credit rating but to get back to sensible economic growth."

At 08:50 GMT, the pound was flat versus the dollar, with £1 buying $1.515, while it slipped by 0.3 per cent against the euro to €1.145.

Learn about the euro and forex trading at City Index.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.