The Pound took a fall against the Dollar today after a barrage of poor data put the British economy very much on the back foot for staging a recovery. To kick things off Sterling hit $1.4936, a one week low for our currency. To add further downward pressure ratings agency Fitch aired their deteriorating views on Britain’s sovereign debt. Put simply, the British economy and banks are at risk of losing their AAA ratings, should this happen then Sterling will bottom out somewhere near the floor. However, Britain was still within tolerance of its top-notch rating but will need to adjust its fiscal policy in order to curb its finances.
Rounding off the negative news, the trade deficit rose above market expectations to its widest since August 2008. The deficit is around £7.987 billion which paints a bleak outlook as despite a weak pound (which makes our exports more competitive) exports had fallen further than first predicted. We are some way off the absolute low of 1.3514 on 19th Jan 2009, but for the time being a dip to 1.47 is not out the question. GBP/USD 1.4980 and GBP/EUR 1.1033. Have a good evening.
