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It was a topsy turvy day for sterling yesterday as the UK’s accounts and creditworthiness were hit upon by a leading credit rating agency.
Fitch, as we said yesterday, had warned that more stimulus put the UK’s AAA credit rating in jeopardy. This sent sterling lower in yesterday’s Asian session although the pound did regain some poise during the session as traders realised that Fitch’s comments were nothing new. We all know that the UK’s finances are in the toilet but I put the probability of a downgrade at less than 10%.
Due to the Fitch statement GBP was unable to take advantage of the weak ZEW announcement from Germany. The aftermath of the poor German confidence measure was limited however as the markets seemed to shrug it off.
The single largest piece of data from the UK this month is out today at 10.30. The Bank of England’s Inflation Report will outline the MPC’s latest targets for growth and inflation and through this probably the path of sterling for the next 3-6 months.
Other than the Inflation Report we have UK unemployment at 09.30.
Latest Exchange Rates At Time Of Writing
| Indicative Rates | Sell | Buy |
| GBP/EUR | 1.1133 | 1.116 |
| GBP/USD | 1.6743 | 1.6768 |
| EUR/USD | 1.5017 | 1.5038 |
| GBP/JPY | 150.32 | 150.65 |
| GBP/AUD | 1.7958 | 1.7991 |
| GBP/NZD | 2.2568 | 2.2601 |
| GBP/CAD | 1.7509 | 1.7545 |
| NZD/USD | 0.741 | 0.743 |
| GBP/ZAR | 12.3 | 12.35 |
| USD/ZAR | 7.33 | 7.37 |
| GBP/PLN | 4.6106 | 4.6402 |
| EUR/JPY | 134.93 | 135.19 |
