S&P confirms UK’s top notch AAA credit rating
Currencies Direct December 20th 2013 - < 1 minute read
The UK Retail Sales report was revealed yesterday and came in a
bit softer than expected at 2 per cent year on year basis versus a
consensus of 2.2 per cent. The market was expecting a much stronger
consumer spending number out of UK after very positive labour data
earlier in the week. As a result of the weaker reading, cable sold
off slightly in the aftermath of the report.
In Europe, the economic calendar was barren with exception of
the Current Account report which printed better than forecast at
21.8B versus 14.2B. The strong data confirmed the positive capital
flows to the region which sustained the single currency despite
weak economic growth.
Meanwhile Standard &
Poor confirmed this morning that the UK’s AAA credit rating
will stay. The agency had been threatening to downgrade the UK, but
now the AAA rating is secure. However, it has been noted that the
outlook remains negative. The news was disappointing for the
European Union, which lost its triple AAA credit rating. S&P
downgraded the EU to AA+ reflecting “the overall weaker
creditworthiness of the EU’s 28 member states”.
The market is still digesting the
Fed taper announcement and this significant change in US
monetary policy should in the long run be the dollar positive if US
growth remains strong. While the Fed had emphasized that the
tapering of its stimulus didn’t mean an interest-rate hike would
occur anytime soon, the market’s attention would now turn to
interest rates and they will look at US data to forecast the timing
of future tightening.
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