In The News - Reuters - Sterling falls, bruised by UK credit rating downgrade

Sterling fell to its weakest since July 2011 against a basket of major currencies on Monday, the first trading day after Moody’s stripped the UK of its triple-A credit rating.

Further falls in the pound were expected in the coming weeks given the grim outlook for the British economy, the prospect of more monetary easing and growing evidence that the Bank of England is comfortable with a falling currency as it seeks to rebalance the economy and encourage exports.

“Investors will remain nervous about the pound,” said Ian Gunner, portfolio manager at Altana Hard Currency Fund. “Monetary policy will now be more significant and the minutes last week showed more easing could be on the way.”

Financial markets had been braced for a rating cut for some time because UK growth was sluggish and finance minister George Osborne missed a series of debt-reduction targets. It had, however, been expected to come after the budget, on March 20.

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