Fitch has joined its fellow ratings agency S&P in downgrading the UK’s rating following last week’s Brexit vote. Fitch downgraded both the UK’s long-term foreign and local currency issuer default ratings and the issue ratings on the UK’s senior unsecured foreign and local currency bonds from AA+ to AA.
The ratings agency said the UK’s vote to leave the European Union will induce an “abrupt slowdown” in short-term GDP growth as businesses defer investment and consider changes to the UK’s legal and regulatory environment.
As a result, it has also revised down its forecast for real GDP growth for 2016 from 1.9% to 1.6%, and from 2% to 0.9% in 2017.
Despite the downgrades, sterling and UK stocks clawed back some ground this morning following two days of turmoil in the wake of the Brexit vote.
Yesterday saw the pound slump to a fresh 31-year low against the dollar, but this morning it had moved higher to trade at $1.33.
The FTSE 100 was up 2.2% at 8.30am, with every stock in positive territory, after a 2.6% fall for the index in the previous session… READ THE ENTIRE ARTICLE >>
[Source: Investment Week - by Daniel Flynn - June 28, 2016]