Fitch Ratings cut the U.K. to AA- from AA with outlook negative.
Fitch citing the hit to public finances:
- The downgrade reflects a significant weakening of the U.K.'s public finances caused by the impact of the Covid-19 outbreak
- and a fiscal loosening stance that was instigated before the scale of the crisis became apparent
- also reflects the deep near-term damage to the U.K. economy caused by the coronavirus outbreak
- and the lingering uncertainty regarding the post-Brexit U.K.-EU trade relationship
On the UK economy, Fitch:
- deep near-term damage to the U.K. economy caused by the coronavirus outbreak and the lingering uncertainty regarding the post-Brexit U.K.-EU trade relationship
- economic devastation being wrought by the coronavirus pandemic
Forecasts:
- GDP to contract nearly 4% in 2020
- growth around 3% in 2021
- Fitch adds that there is a "material downside risk" to their forecast
---
GBP had a volatile ride last week, that is se to continue in the week ahead. For GBP/USD, don't forget the US dollar side, where the panic demand for dollars has subsided:
