Moody’s Investors Service, the US-based rating agency, said in a statement on early Monday that it affirmed UK's Aa2 long-term issuer and senior unsecured ratings but cut the country’s sovereign credit outlook to ‘negative’.
The reason behind the outlook downgrade is cited: “The country's ability to set policy has weakened in the Brexit era along with its commitment to fiscal discipline.”
"The increasing inertia and, at times, paralysis that has characterized the Brexit-era policymaking process has illustrated how the capability and predictability that has traditionally distinguished the UK's institutional framework has diminished,"
"The decline in institutional strength appears to Moody's to be structural in nature and likely to survive Brexit given the deep divisions within society and the country's political landscape."
On the outlook downgrade, the Cable fell from the 1.2805 highs, but remains in the latest trading range seen in the Asian opening hours. At the press time, GBP/USD trades +0.18% higher at 1.2793. unable to resist above the 1.28 handle.
However, the weekend election opinion polls, which showed the UK PM Johnson’s Conservative Party in the lead over the opposition Labour Party, continue to keep the sentiment somewhat buoyed around the pound.
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