The value of the UK pound has fallen following news that credit ratings agency Moody’s has downgraded the UK’s coveted AAA credit rating.
The news, announced on Friday, has caused the pound to fall to a two-and-a-half year low against the dollar. The pound has also fallen against the Euro, to its lowest value in 16 months.
Despite UK forecasters saying that the UK is beginning to recover economically, Moody’s included a warning with its grading saying that any growth would “remain sluggish” for the foreseeable future. However Business Secretary Vince Cable dismissed the move as being “largely symbolic – he also said credit ratings agencies like Moody’s were “tipsters.”
The UK’s had kept its AAA rating, the highest that can be awarded, since 1978. The move now leaves Germany and Canada as the only major economies to have the AAA rating, while the UK joins other countries like France and the US in having its title downgraded in recent months.
The ratings indicate the risk to investors of a country defaulting on its borrowing. AAA indicates that there is a minimal risk to investors.
How will the loss of the UK’s AAA rating, and the fall in value of the pound affect your business? Let us know in the comments section below.