S&P Raises Its US Credit Outlook, GBP USD Rate Still Climbs

June 11, 2013 - Written by John Cameron

STORY LINK S&P Raises Its US Credit Outlook, GBP USD Rate Still Climbs

Perhaps the most notable development in the global currency markets during yesterday’s session acme in the form of an announcement from leading credit ratings agency Standard & Poor’s. The organisation, which is one of the three big global credit grading bureau, revealed just before the European equities close that it had raised its outlook for the world’s leading economy from its previous rating of ‘negative’ to ‘stable’. In practice, this means that the US economy is less likely to incur any further credit downgrade in the near term following last year’s lowering of its sovereign credit rating from AAA to AA+.

Market participants have had a testy relationship with the world’s credit ratings agencies since they collectively failed to forewarn them of the impending global credit crisis which unfurled in 2007. The US Dollar actually strengthened against the majority of the other majors following S&P’s debt downgrade of last year – an indication of investors’ collective lack of faith in the ratings agencies. Yesterday’s announcement from S&P did not budge the relative level of the US Dollar by a massive degree, but the Greenback did initially make small gains against other majors including the Pound. However, by the middle part of the North American equities session, the Pound to US Dollar exchange rate (currency : GBP USD) had climbed to its intraday high of 1.5571.

Looking ahead to today’s session, the key data release of note from a Sterling perspective comes this afternoon with the publication of May’s NIESR GDP estimate from the NIESR. Recent UK data releases have been of a distinctly firmer tone than was the case earlier in the year, with last week’s PMI survey of the services sector of the UK economy proving to be a real highlight. If this afternoon’s GDP growth projection hits the right buttons and prints at above April’s quarterly showing of 0.8%, then the Pound could motor into the middle part of the week on a firm footing.

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TAGS: American Dollar Forecasts Daily Currency Updates Dollar Po Forecasts