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Forex Flash: Rating agencies descend on UK – Investec

FXstreet.com (Barcelona) - The news from the last few days has been pretty poor for the pound with Fitch following Moody’s by stripping the UK of its triple-A credit rating on Friday evening, stating its downgrade reflected a weaker economic and fiscal outlook. Fitch did however return its outlook on the UK economy to ‘stable’ reducing the threat of any further rating cuts in the near term.

The move came after the International Monetary Fund itself downgraded its economic forecasts for the UK, with figures within the Fund stating the government needs to rethink its austerity drive and consider more flexible policies, due to the weak state of the economy. In January, the IMF predicted economic growth for the UK of 1% during 2013 however this has now been slashed to 0.7%.

According to the Investec Research Team, “As the IMF prepares to visit Britain next month for its annual consultation over his economic plans Chancellor George Osborne will likely announce an extension of the Bank of England’s £80bn Funding for Lending Scheme, suggesting the scheme will run for a year longer and be broadened to include specialist lenders.”

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