May 21 (Bloomberg) -- The pound dropped against most of the other major currencies after Standard & Poor’s signaled Britain may lose its top credit rating for the first time as the government’s finances deteriorate during the economic slump.
Sterling declined from a six-month high versus the dollar and dropped the most in two weeks against the euro as S&P lowered the outlook on the U.K.’s AAA rating to “negative” from “stable.” The dollar rose from a four-month low against the euro after former Federal Reserve Chairman Alan Greenspan said the financial crisis isn’t over, increasing demand for the greenback as a haven.
“People will be cautious before placing bets on sterling,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “People will be watchful, and this will benefit those currencies of countries that don’t have fiscal problems, such as the Norwegian krone and the Australian dollar. We are going to see a pullback in the pound.”
The pound fell 0.8 percent to $1.5629 at 9:01 a.m. in New York, from $1.5755 yesterday. It earlier touched $1.5817, the highest level since Nov. 10. It dropped as much as 1.4 percent to 88.70 pence per euro, the largest intraday decline since May 7. The dollar was at 94.90 yen, compared with 94.88 yen. The U.S. currency traded at $1.3735 per euro, from $1.3780 yesterday, after touching $1.3839 earlier, the weakest level since Jan. 5. read more
Sterling declined from a six-month high versus the dollar and dropped the most in two weeks against the euro as S&P lowered the outlook on the U.K.’s AAA rating to “negative” from “stable.” The dollar rose from a four-month low against the euro after former Federal Reserve Chairman Alan Greenspan said the financial crisis isn’t over, increasing demand for the greenback as a haven.
“People will be cautious before placing bets on sterling,” said Brian Kim, a currency strategist at UBS AG in Stamford, Connecticut. “People will be watchful, and this will benefit those currencies of countries that don’t have fiscal problems, such as the Norwegian krone and the Australian dollar. We are going to see a pullback in the pound.”
The pound fell 0.8 percent to $1.5629 at 9:01 a.m. in New York, from $1.5755 yesterday. It earlier touched $1.5817, the highest level since Nov. 10. It dropped as much as 1.4 percent to 88.70 pence per euro, the largest intraday decline since May 7. The dollar was at 94.90 yen, compared with 94.88 yen. The U.S. currency traded at $1.3735 per euro, from $1.3780 yesterday, after touching $1.3839 earlier, the weakest level since Jan. 5. read more
