Sterling suffers from loss of UK's AAA credit rating | Smart Daily Currency Note

Sterling

Late on Friday, the UK lost its top credit rating from Moody’s, one of three credit rating agencies, who downgraded the UK debt by one grade to Aa1 from Aaa. This was not unexpected and is due to the bleak outlook for the nations growth and it was also noted by Moody's that there are significant challenges that the government faces in trying to reduce public debt. Whilst a downgrade had been anticipated by many economists for some time, it still sent shockwaves through the market causing sterling to drop against all of its major trading peers bar the Japanese yen. Sterling had started Friday on the front foot reaching 1.1617 against the euro and 1.5310 against the US dollar before dropping off in the afternoon following comments from one of the members of the Monetary Policy Committee (MPC) who was urging for another round of quantitative easing. Perhaps the most influential release this week is the second estimate of the UK's fourth quarter GDP which is expected to show a contraction of 0.3%. Other data released this week includes realised sales data from the Confederation of British Industry (CBI) and the Manufacturing Purchasing Managers' Index (PMI) data which will be released on Friday plus several members from the MPC will be speaking this week. Call now for the latest updates on sterling.

Euro

The euro had a mixed day on Friday after better than expected German sentiment data helped support the euro as the markets hope this implies that the European powerhouse wont slip into recession. This positivity is in spite of figures released showing that the final reading for the last quarter German GDP showed a contraction of 0.6%. The downbeat EU economic forecast for the next two years prevented a euro rally as growth forecasts were downgraded significantly for both France and Germany, whilst predicting the Eurozone as a whole to contract by 0.3% in 2013. Furthermore, the news that banks were only repaying €61 billion from an expected €122 billion in the ECB's LTRO repayment caused the euro to drop to a six week low against the US dollar. The Italian elections continue today and the markets remain nervous in anticipation of the result especially if former Prime Minister Silvio Berlusconi should win enough votes to achieve a hung parliament as political uncertainty would return and could unsettle the euro. Other data released this week includes manufacturing PMI, inflation data and unemployment data from Germany, whilst the President of the ECB is also speaking. Get the latest rate by calling us now.

US dollar

The US dollar traded somewhat on the sidelines on Friday as news from the UK and Europe dominated the headlines. There is a raft of data out of the US this week which includes consumer confidence statistics, preliminary GDP figures which are expected to show modest growth of 0.5% for the fourth quarter of 2012, manufacturing PMI and the Chairman of the Federal Bank is speaking on several occasions. With so much data and commentary out of the US this week there  is the possibility for a lot of volatility, call in now or a market update and a live quote.  

Worldwide

Elsewhere, the Australian dollar performed well on Friday following comments from the Governor of the Reserve Bank of Australia who indicated that another interest rate cut was less likely. The Canadian dollar struggled on Friday, dropping to a seven month low against the US dollar after extremely poor retail sales data was released in conjunction with lower than expected inflation data. Chinese manufacturing PMI data was released early this morning and later on this week we have business confidence figure from New Zealand, private businesses expenditure in Australia, more manufacturing PMI data from China and GDP figures from Canada. Call in now for a market update and a live quote.