Currency Market Reaction to loss of Britain's AAA Credit Rating

A Currency Market report from Moneycorp following the loss of Britain’s AAA credit rating.

Euro

Mixed fortunes for the euro saw it lose one and a half US cents and strengthen by a cent and a half against the pound in foreign exchange. Sterling had a rotten week, which culminated in the long-awaited loss of Britain’s Aaa credit rating from Moody’s. The euro’s fortunes this week will depend on the performance of the fringe parties in the Italian general election.

US Dollar

No other currency could keep pace with the dollar, which strengthened by three and a half cents against the pound. Sterling had a rotten week, which culminated in the long-awaited loss of Britain’s Aaa credit rating from Moody’s. There was also demand for the dollar as a safe haven ahead of the general election in Italy; investors worried that the fringe parties could do well.

Canadian Dollar

Although it was not in contention for the US dollar’s top position in the weekly currency race the Canadian dollar was able to strengthen by a cent against the pound. Sterling had another rotten week, which culminated in the long-awaited loss of Britain’s Aaa credit rating from Moody’s. The Loonie might have done better had it not been for disappointing Canadian economic data which included a sharp fall in retail sales.

Australian Dollar

Close to the top of the table the Australian dollar strengthened by three cents against the pound. Sterling had another rotten week, which culminated in the long-awaited loss of Britain’s Aaa credit rating from Moody’s. The Aussie received assistance from the Reserve Bank of Australia governor, who told parliament’s Standing Committee on Economics that he would only consider intervening to depress the AUD if it were to become “seriously overvalued”.

New Zealand Dollar

Muddling along in the middle of the field the New Zealand dollar strengthened by nearly three cents against the pound. Sterling had another rotten week, which culminated in the long-awaited loss of Britain’s Aaa credit rating from Moody’s. Had it not been for the Reserve Bank of New Zealand governor the Kiwi might have done even better. He warned that “the Kiwi is not a one-way bet” and that he is “prepared to intervene”. So expect people to be using the Moneycorp send money abroad feature whilst that pans out.