FX Daily Update
The National Bank of Canada | Jun 28, 2016 08:43AM ET
Stability at the expense of democracy?
Ratings agency S&P did not take long to react: yesterday, it announced that it was downgrading the UK’s credit rating from AAA to AA. It justified its decision by stating that the country’s annual growth forecast was 1.1% (rather than 2.1%) and that overall, the outlook was negative. Fitch also downgraded its rating from AA+ to AA for the same reasons. It seems likely that Moody’s will follow suit shortly.
After yesterday’s panic-plagued session, markets are in somewhat of a lull this morning. European markets are in the green and most major currencies, including the GBP, are up against the greenback, though only very slightly in the case of the British pound. There may be some faint hope that, theoretically, Britain’s parliament could veto Brexit due to referendum results not being legally binding. This remains to be seen as negotiations continue in Brussels.
This morning, we are expecting U.S. GDP data for the first quarter, giving us an indication of the health of the U.S. economy. However, in the current context, any positive result will very likely be called into question.
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