Sterling plummets as Fitch says UK fiscal challenge is “formidable”

Date: June 08, 2010

Sterling tumbled against the US dollar and euro this morning after credit agency Fitch Ratings said the UK’s fiscal challenge was “formidable” and needed a strong medium-term strategy – including a faster pace of deficit reduction than set out in the April 2010 Budget.

Sterling fell 0.83% against the US dollar to $1.4383 and 0.48% against the euro to 1.1906.

Mark Bolsom, Head of the UK Trading Desk at Travelex Global Business Payments said, “The gloomy outlook from Fitch is weighing heavily on sterling this morning and will have heightened investor fears of a debt downgrade to the UK sovereign debt rating.

“The fact that Fitch has felt the need to comment on the UK deficit again is an indication that they are still considering downgrading the UK’s sovereign debt rating. This will turn up the pressure on the new coalition Government.

“UK small and medium sized businesses do remain concerned about UK’s economic situation and fear a return to recession. The threat of swingeing spending cuts, higher taxes and the ongoing turmoil in Europe are clearly the main drivers behind this.”

“The conundrum the Coalition face is balancing the necessary spending cuts and higher taxes without derailing our fragile economic recovery.”

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Jessica Buttress
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Travelex holds key positions in its three main areas of activity: Global Business Payments (TGBP, which includes Travelex Personal Payments), Currency Services and Card and Mobile Payments. Every year, more than 35,000 corporate clients and 30 million customers trust Travelex to manage their foreign exchange requirements.

Recently recognised by TowerGroup research as Industry Leader for payments innovation for SMEs, Travelex currently handles international payments worth £40 billion annually for over 750 large corporate and financial institutions.

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