Forex News

The UK currency edged down against the kiwi in trading yesterday, losing just 0.1%, as weak global equities offset a poor report on the UK’s credit rating. Sterling lost ground on Tuesday after a ratings agency said the UK was the major economy most at risk of losing its AAA credit rating. However, after a knee-jerk sell-off in response to the comments, the pound recovered some poise after traders realised that the remarks contained no new information. The kiwi was also struggled as risk appetite waned slightly with global equities failing to build on Monday’s gains, which dampened demand for the higher-yield currency.

The pound continued to lose ground to the aussie dollar yesterday, dipping back below 1.80 as Fitch rating agency commented on the fragility of the UK’s AAA credit rating. Sterling slipped back sharply as Fitch released the news in the early hours yesterday morning, with investors concerned about the long term health of the UK economy. However, sterling pulled back steadily from its sell off following a survey from the UK’s Royal Institution of Chartered Surveyors, which said its measure of house prices rose to +34, its highest in nearly three years.

The dollar stabilised after heavy selling on Monday as weak data from the eurozone put pressure on the single currency, with the pair closing slightly down at 1.4991. The dollar found support as global equities turned negative, failing to build on gains at the start of the week, which dulled demand for the “riskier” euro. The single currency was also undermined by a report that showed German investor confidence declined once again in November, by more than economists estimated. The ZEW Centre for European Economic Research said its index of investor and analyst expectations in Germany, which aims to predict developments six months ahead, dropped to 51.1 from 56 in October.

The pound dropped for the first time in six days against the greenback, though its losses were minimized with dollar selling remaining the overall market trend. Initially sterling fell sharply, losing over a cent, after a ratings agency said highly-indebted Britain was the major economy most at risk of losing its triple-A rating. The pound retreated from a three-month high against the dollar after Fitch told Reuters Britain would have a tougher time than the United States in sustaining its fiscal deficit without impacting interest rates or the currency. However, sterling was able to trim its losses as strong data on UK house prices and retail sales released overnight suggested the economy was showing positive signs of emerging from recession.