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☆ Fitch affirms United Kingdom rating at 'AA-'
▼ + stars: | 2022-12-09 | by ( ) www.reuters.com time to read: +1 min

REUTERS/Peter NichollsDec 9 (Reuters) - Rating agency Fitch maintained United Kingdom's sovereign debt rating at "AA-" on Friday, citing Prime Minister Rishi Sunak's macroeconomic policy framework, deep capital markets and the sterling's international reserve currency status. The agency affirmed its outlook for the country at "negative", due to high public and external debt, as well as rising energy prices. Despite concerns about a potential recession, investors have pinned hopes that the new government leadership will reinstill confidence in the country's fiscal health. "The new fiscal strategy has contributed to improved financial markets confidence," Fitch said. The agency also affirmed Bank of England's rating at "AA-", with a negative outlook.

☆ Early voter turnout accelerates in Georgia Senate runoff after record-breaking day
▼ + stars: | 2022-11-29 | by ( Kevin Breuninger | ) www.cnbc.com time to read: +3 min

Georgia's early-voter turnout is accelerating in the high-profile Senate runoff race between Democratic Sen. Raphael Warnock and Trump-backed Republican Herschel Walker — even after voters already crushed the state's in-person record for early voting the previous day. "As of noon, we've had 118,130 Georgians cast an early vote today," Sterling tweeted, adding, "Don't know if it will stay that rapid." The data show that more than 48% of early voters are white and about 38% are Black, and that Black voters are showing up to vote early at a higher turnout rate. The early voter turnout also appears to skew female, 55% to 44%, according to the state elections office. The Dec. 6 runoff in Georgia was scheduled after neither Warnock nor Walker won more than 50% of the vote in the November general election.

☆ 'The old UK growth model is dead': What a long-term weak pound means for Britain
▼ + stars: | 2022-11-07 | by ( Jenni Reid | ) www.cnbc.com time to read: +5 min

watch nowA historically weaker pound on a medium- to long-term basis has a variety of impacts on the U.K. more broadly, economists told CNBC. But, Portes said, the weaker pound is not in itself an issue for the fiscal planning the government is currently doing, with a much-anticipated budget due Nov. 17. 'Growth model is dead'According to Blyth, beyond the pain suffered by households, the higher prices caused by a weaker currency will have deeper and longer-lasting effects. The potential upside to exports was negated by Brexit, he said, pointing out that the U.K. economy had declined from 90% to 70% of the size of Germany's since the 2016 vote. It means that the old U.K. growth model is dead," Blyth continued.

And economic policy is only gradually being taped back together before the BoE meets again. It's also pulled the implied peak Bank rate next year some 150bp lower to 4.75% over the same period - back below the assumed 'terminal rate' at the U.S. Federal Reserve. "We see the risks skewed towards the BoE sounding dovish this week and ultimately "underdelivering" versus current pricing," the Deutsche analyst wrote. Central bank rate hikes and SterlingReuters Graphics Reuters GraphicsThe opinions expressed here are those of the author, a columnist for Reuters. by Mike Dolan, Twitter: @reutersMikeD; Editing by Josie KaoOur Standards: The Thomson Reuters Trust Principles.

☆ Sterling supported by expectations Rishi Sunak will become prime minister
▼ + stars: | 2022-10-24 | by ( Alun John | ) www.reuters.com time to read: +2 min

LONDON Oct 24 (Reuters) - Sterling strengthened on Monday finding short term relief from the likelihood that former finance minister Rishi Sunak would become Britain's next prime minister after Boris Johnson quit the race. It rose as far as $1.1402 in Asian trading before paring gains to hold just inside positive territory at $1.1323. Former prime minister Boris Johnson had raced home from a holiday to see if he could enter the ballot. The so-called 'mini budget' also ultimately led to the removal of Truss as Prime Minister. Register now for FREE unlimited access to Reuters.com RegisterReporting by Alun John; Editing by Kirsten DonovanOur Standards: The Thomson Reuters Trust Principles.

☆ Here's where stocks and inflation could be headed next after the market's stunning reversal
▼ + stars: | 2022-10-14 | by ( Jason Ma | ) www.businessinsider.com time to read: +7 min

Analysts at Barclays raised their forecasts on Fed rate hikes in December and February to 75 and 50 basis points, respectively. Any relief rally that takes hold in the stock market could send the S&P 500 to its first big resistance test around 3,914, Stockton added. High inflation reports could become the norm after more than a decade of sub-2% inflation readings, according to Bank of America. That's because underinvestment in energy production, sticky wage inflation, and aging demographics are set to drive structural inflation for years to come. There's reason to believe the stock market is close to its low point, according to RBC.

As Truss spoke on Friday gains made in anticipation of the corporation tax U-turn faded. Ten-year gilt yields were 40 bps above session lows hit earlier on Friday, also pushed up by moves in bond yields globally. UNDERWHELMEDBritain's mini-budget three weeks ago triggered some of the biggest ever jumps in British bond yields, exposed vulnerabilities in the pensions sector -- undermining the country's financial stability. "How it impacts liquidity on the gilt market going forward is something we are monitoring closely." Rabobank's McGuire said pressure on UK assets could lead the BoE to re-intervene in the bond market or delay its quantitative tightening, bond-selling plans.

☆ Sterling falls for a fifth day; turmoil dogs the bond market
▼ + stars: | 2022-10-11 | by ( Amanda Cooper | ) www.reuters.com time to read: +4 min

LONDON, Oct 11 (Reuters) - The pound fell for a fifth day on Tuesday as the turmoil engulfing UK government bond markets forced the Bank of England to step in yet again to attempt to stem a damaging sell-off in the country's debt. Sterling fell 0.3% to $1.1036, and was also down 0.3% versus the euro at 88.00 pence. If you have a look at the population of holders of long-dated UK assets - anything that is 15-20 years - it's mostly domestic funds," ADM Investor Services Chief Economist Marc Ostwald said. The pound promptly nosedived and the gilts market went into a tailspin, putting pension funds at risk of insolvency. But sterling's problems extend beyond the liquidity crunch in the gilts market.

☆ Sterling slips after IMF and Moody's rebuke Britain over tax plans
▼ + stars: | 2022-09-28 | by ( Harry Robertson | ) www.reuters.com time to read: +3 min

LONDON, Sept 28 (Reuters) - Sterling resumed its fall on Wednesday after the International Monetary Fund (IMF) and ratings agency Moody's scolded Britain over its new spending plans. The pound was down 0.56% to $1.068 with renewed dollar strength also weighing on the currency. Sterling tumbled to an all-time low against the dollar of $1.0327 on Monday as investors dumped UK assets after finance minister Kwasi Kwarteng unveiled plans to slash taxes and ramp up borrowing. Ratings agency Moody's said the unfunded tax cuts were "credit negative" and were likely to weigh on growth. UK pound coins plunge into water coloured with the European Union flag colours in this illustration picture, October 26, 2017.

☆ Sterling slides after BOE jumps into gilt market, dollar marches on
▼ + stars: | 2022-09-28 | by ( Alun John | ) www.reuters.com time to read: +3 min

Pound and U.S. dollar banknotes are seen in this illustration taken January 6, 2020. REUTERS/Dado Ruvic/Illustration/File PhotoLONDON, Sept 28 (Reuters) - Sterling tumbled again on Wednesday after the Bank of England (BOE) said it would step in to prop up the gilt market, the latest sign of nerves in financial markets which helped nudge the dollar to its latest two-decade peak. The BOE said it would buy as many long-dated government bonds as needed between now and Oct. 14 to stabilise financial markets, and added that it would postpone next week's start of its gilt sale programme. "As the rest of the world is in tightening mode, this should be sterling negative. Long-dated British government prices soared after the announcement and the yield on the 30-year gilt slid around 30 basis points.

At the International Monetary Fund's last count in the first quarter of this year, almost 5% of the world's foreign currency reserves were denominated in sterling - a total of $625 billion dollars worth of sterling and sterling assets on a crude calculation from the $12.55 trillion total. The UK has a reserve currency so it can always issue debt – it's just a question of the right price." But what if that reserve currency position is threatened and foreign central banks balk at holding so much sterling in their national savings stashes? Seven of the world's top 10 reserve holding central banks are in Asia or the Middle East. UBS chart on its 2022 survey of world reserve managersThe opinions expressed here are those of the author, a columnist for Reuters.

☆ 3 charts that show the UK's market meltdown
▼ + stars: | 2022-09-27 | by ( Jenni Reid | ) www.cnbc.com time to read: +2 min

A so-called "mini-budget" by the U.K.'s new government Friday has sparked a level of market volatility not seen in the country since the Covid crash or the Great Financial Crisis. It comes as inflation remains at 9.9% and the country has likely already entered a recession. The pound lost nearly 3.6% against the dollar Friday and continued to fall Monday when the market reopened. Yields on U.K. government bonds have rocketed following the government's budget — meaning their prices have fallen drastically (bond yields move inversely to prices). Soaring yields and a slumping pound have led some mortgage lenders to pause new home loans and withdraw certain mortgage offers.

☆ As the pound tanks, Goldman and others reveal the UK stock market's likely winners and losers
▼ + stars: | 2022-09-27 | by ( Zavier Ong | ) www.cnbc.com time to read: +4 min

The British pound continued its slide against the U.S. dollar this week, hitting a new record low against the greenback Monday. Goldman Sachs European strategist Sharon Bell said the bank expects the pound to trade at around $1.05 over the next three months. Winners Secker is overweight the blue-chip FTSE 100 , which he believes is "arguably the ultimate 'weak FX' play." "The losers in the U.K. are the small-and-mid cap companies that are importing raw materials, which has now become more expensive. The FTSE 250 , which is more domestic than the FTSE 100, will also tend to suffer, all else equal, as sterling falls," Bell said.

☆ Pound rebounds as traders turn to BoE response
▼ + stars: | 2022-09-27 | by ( Tom Westbrook | ) www.reuters.com time to read: +3 min

As the dollar eased, the pound rose 1% in Asia to $1.0805 and is up nearly 5% from Monday's low at $1.0327. The kiwi also rose 1%, its first gain in seven sessions, the euro rose 0.5% and the Aussie rose 0.7%. "More BoE rate hikes could only briefly boost the pound but not on a sustainable basis," said Gao. As the pound fell on Monday, the dollar surged to new highs on the euro and many more. The Aussie and kiwi hit 2-1/2 year lows on Monday and were due for a rebound, with the Aussie up 0.6% to $0.6500 and the kiwi up 1.2% to $0.5703.

☆ Morning Bid: Unstable cable
▼ + stars: | 2022-09-26 | by ( ) www.reuters.com time to read: +5 min

Supercharging an already rampant U.S. dollar around the globe, the sterling/dollar rate - nicknamed 'cable' by traders - went into virtual freefall at one point early on Monday. The pound's plunge comes ahead big auctions of both long-term and inflation-linked British government bonds this week and increasing liquidity issues in the gilt markets. read moreThe scale of the pound's losses and fiscal fears has many traders speculating about emergency rate rises by the Bank of England. Rate futures now price in a three-quarters-of-a-point hike to 3% on or before the BoE's next meeting on Nov. 2. read moreChina also acted in a different way on Monday to rein in yuan ongoing slump against the dollar.

☆ Sterling crumbles to all-time low, euro at 20-year low
▼ + stars: | 2022-09-26 | by ( Dhara Ranasinghe | ) www.reuters.com time to read: +4 min

Register now for FREE unlimited access to Reuters.com RegisterBut it was sterling's slide that rippled across markets, down as much as 4.9% to an all-time low of $1.0327 . Sterling was also down 1% against the euro, having hit its lowest since September 2020 at 92.60 pence . The euro also touched a fresh 20-year trough at $0.9528 and was last down 0.5%. And the dollar index - where the basket includes sterling, the euro and the yen - reached 114.58 for the first time since May 2002, reflecting the greenback's broad strength. The risk-sensitive Australian dollar dropped to $0.64845, its lowest since May 2020, and the Canadian dollar touched 1.3638 to its U.S. counterpart, its weakest since July 2020.

☆ Sterling crumbles to all-time nadir, euro at 20-year low
▼ + stars: | 2022-09-26 | by ( Dhara Ranasinghe | ) www.reuters.com time to read: +3 min

Sterling also tumbled 1.3% against the euro, having hit its lowest since September 2020 at 92.60 pence . Kit Juckes, head of currency strategy Societe Generale in London, said markets had a tendency to overshoot but noted two points on sterling's slide. "The second is that the mini budget has allowed sterling to be the short of choice against the dollar." The euro also touched a fresh 20-year trough at $0.9528 , as the pound's slide rippled across markets. China's offshore yuan slid to a new low of 7.1728 per dollar, its weakest since May 2020.

☆ The pound falls again versus the dollar after the Bank of England says it's monitoring financial markets following the currency's slide to a record low
▼ + stars: | 2022-09-26 | by ( Carla Mozée | ) www.businessinsider.com time to read: +3 min

The pound after the Bank of England said it's closely monitoring financial markets. The pound fell by nearly 2% after the statement but didn't return to record lows. "The Bank is monitoring developments in financial markets very closely in light of the significant repricing of financial assets," BoE Governor Andrew Bailey said in a statement Monday. Financial markets were looking for the Bank of England to say it would raise interest rates or enact emergency measures to aid the pound. Financial markets on Monday were pricing in expectations for UK interest rates to rise to soar to 6% next year on the back of sterling's fall.

An employee is seen walking over a mosaic of pound sterling symbols set in the floor of the front hall of the Bank of England in London, in this March 25, 2008 file photograph. Yet the rapid rise in yields investors now receive for owning UK bonds hasn't helped sterling much. Pound slumps and UK borrowing costs surgePredicting the short-term direction of currencies is notoriously hard. Against the euro the pound is only at two-year lows, although it is down 3% since Friday. "People will look at the UK and think that that's not a market that is stable," said Payne at Janus Henderson.

☆ Morning Bid: Pounded
▼ + stars: | 2022-09-26 | by ( ) www.reuters.com time to read: +2 min

Pound and U.S. dollar banknotes are seen in this illustration taken January 6, 2020. On Friday, gilts suffered their heaviest selling in decades, and before that, the yen and U.S. interest rate futures have been roiled. Global tension is also mounting over the war in Ukraine, as Russia holds widely-criticised votes aimed at annexing territory it has taken by force. Besides sterling, Asian stock markets fell on Monday. European futures fell 0.3% and S&P 500 futures fell 0.6%.

A general view of the Bank of England (BoE) building, the BoE confirmed to raise interest rates to 1.75%, in London, Britain, August 4, 2022. REUTERS/Maja Smiejkowska/File PhotoLONDON, Sept 26 (Reuters) - Bank of England Governor Andrew Bailey said on Monday that the BoE "will not hesitate" to raise interest rates if needed to meet its 2% inflation target, and that it was watching financial markets "very closely" following sharp moves in asset prices. "The Bank is monitoring developments in financial markets very closely in light of the significant repricing of financial assets," Bailey said in a statement. However, traders viewed the BoE statement has decreasing the likelihood of a move before the BoE's next scheduled rate announcement on Nov. 3. Sterling fell more than a cent against the dollar and interest rate swaps for one week ahead priced in substantially lower rates than immediately before.

Finance minister Kwasi Kwarteng's plans will require an extra 72 billion pounds ($79 billion) of government borrowing over the next six months alone, and - a particular concern for investors - cement permanent tax cuts costing 45 billion pounds a year. But to bond investors, they bring the prospect of more persistent inflationary pressures - at a time when inflation is already near a 40-year high - as well as tighter Bank of England (BoE) policy. Government borrowing is likely to total 218 billion pounds this financial year and 229 billion pounds in 2023/24, Citi predicted, and it expects benchmark 10-year British government bond yields to rise to 4.25%. Adding to the pressure, on Thursday the BoE confirmed it planned to reduce its own 838 billion pounds of gilt holdings by 80 billion pounds over the coming year. "That is a strong indication that domestic and overseas investors are losing confidence in the UK's inflation-fighting credibility," he said.

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