Forex Flash: GBP coming under renewed selling pressure - BTMU

FXstreet.com (Barcelona) - Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that the pound is also coming back under renewed selling pressure in the near-term which was supported by Fitch’s decision to strip the UK of its AAA-credit rating late on Friday, although the credit rating is now stable.

He see that it follows a similar credit rating downgrade from Moody’s in February. Similarly he notes that Fitch’s decision primarily reflects a weaker economic and fiscal outlook and the ratings agency now projects that general government gross debt will peak at 101% of GDP in 2015/16. He writes, “It is further blow to the UK government after receiving criticism last week from the IMF to slow the pace of fiscal consolidation.” He sees that the disappointing performance of the UK economy will be evident again this week when the GDP report for Q1 will be released which may reveal that the UK economy has entered a triple-dip recession. He writes, “The BoE and government are expected to announce changes to the Funding for Lending Scheme in the coming weeks in an attempt to boost lending to small and medium-sized enterprises.”