Pound to Euro exchange rate: The Pound declined against the major currencies yesterday following a credit rating warning from Fitch

Foreign Exchange Rates Currency News - The Pound declined against the major currencies yesterday following a credit rating warning from FitchYesterday the Swiss National Bank announced its continuing commitment to maintaining its EUR/CHF cap at 1.20 and upgraded their growth forecast from 0.5% to 0.8% for 2012.

The Pound declined against the almost all of the major currencies yesterday following a credit rating warning from Fitch. The credit-rating agency followed in Moody’s recent footsteps and placed the UK on ‘negative outlook’. They warned that there is a ‘slightly greater than 50% chance’ of Britain losing its covetous AAA credit rating within the next two years. Fitch said a weaker than expected recovery in the economy could foil government efforts to transform debt into growth.

Analysts at Fitch announced that fragile government tax and spending forecasts could be derailed as a result of the permanent damage inflicted upon the economy’s supply capacity by the Eurozone debt crisis and ensuing credit crunch.
“The UK has very limited fiscal space to absorb further adverse economic shocks in light of such elevated debt levels and a potentially weaker than currently forecast economic recovery.”

Deputy Prime Minister Nick Clegg took the decision from Fitch as a warning that the UK must stick to its austerity measures in order to improve economic confidence and inspire a return to growth. Talking at an annual British Chambers of Commerce conference, Clegg pointed out how a positive shift in sentiment can already be seen: “Towards the end of last year, the UK saw business confidence drop, but this week several business surveys suggest it is beginning to bounce back.”

Clegg described the 2008 financial crisis as a ‘heart attack’ and stressed that there is no ‘magic wand’ to heal the resultant deep fissures in the UK economy, which shrank by -0.2% late last year; improved consumer spending and strong export growth were no match for huge slashes in business investment.

Swiss Franc / US Dollar

Yesterday the Swiss National Bank announced its continuing commitment to maintaining its EUR/CHF cap at 1.20 and upgraded their growth forecast from 0.5% to 0.8% for 2012. Following the decision the Swiss Franc improved by 0.28% against the Euro exchange rate, 0.40% against the Pound exchange rate, and 0.58% against the US Dollar exchange rate.

Today’s US Consumer Price Index figures showed an increase in inflation by 0.4% – the most in 10 months – causing the US Dollar to lose ground against its major currency peers. Growing oil prices, as a result of the rising tensions in Iran, accounted for over 80% of the change in prices. Fed Chairman Ben Bernanke gave a statement on Wednesday in which he tried to stabilise inflationary fears by describing the price hike as a ‘temporary jump.’ But upon the CPI release today the US Dollar fell by 0.94% against the Pound, 0.76% against the Euro, and 0.62% against the Aussie Dollar.

Today’s Pound to US Dollar Exchange Rate is 1.585 (15:00 GMT).

Today’s Euro to US Dollar Exchange Rate is 1.317 (15:00 GMT).

Today’s Australian Dollar to US Dollar Exchange Rate is 1.058 (15:00 GMT).

Data Released

EU 10:00 – European Monetary Union Trade Balance (January)

US 12:30 –Consumer Price Index (February)

US 13:15 – Industrial Production (February)

U.S 12:30 – Producer Price Index (February) – Ex Food Energy

U.S 13:55 – Reuters/Michigan Consumer Sentiment Index (March)

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