Tuesday, May 10, 2011

S&P Lowers Greek Credit Rating; Slumping UK Growth Forecast?

May 10, 2011 - Many experts are expecting the growth forecast for the United Kingdom to be lowered by the Bank of England tomorrow. From Bloomberg today: The pound weakened versus the dollar and the euro on speculation the Bank of England will lower its economic growth forecasts when it releases its inflation report tomorrow, making higher interest rates less likely."
The report continued: "Sterling declined against most of its major peers, falling from the highest in more than a month versus the euro. The currency depreciated even as data today showed U.K. retail sales and a house-price gauge rose last month. More at Bloomberg.com... Meanwhile, the euro is still in need of urgent care and is still threatened by the crises in Greece and Portugal. Reuters reports now that "Euro zone finance ministers are likely to back a bailout for Portugal on Monday and tell Greece it must deliver on agreed fiscal and privatisation targets if it wants new emergency financing next year." Tell me if I'm wrong: That doesn't sound good. More at Reuters... The Independent Online (South Africa) reports this evening that the euro "tumbled 3.45 percent in the final two days of last week, the biggest back-to-back loss since 2008, as the European Central Bank (ECB) signalled it was in no rush to raise interest rates and Der Spiegel magazine said Greece might withdraw from the currency bloc. EU officials denied the report and said Greece would need more aid after investors drove yields on its two-year notes to more than 25 percent." More at Indpendent Online... HOWEVER: The S&P credit agency has "reduced the credit rating of Greece to B level and noted that new reductions were possible, pressured the euro. Therefore, the EUR/USD dropped to $1.4250." That report acknowledged that rumors of a Greek withdrawal from the Euro-zone have not been confirmed. More atStockMarketsReview.com... A related report at France 24 says that Greece admits to "talking with EU partners about ways to plug a 27 billion euro funding gap next year after it conceded it was unlikely to be able to return to bond markets as planned" and that Greece's borrowing has "hit record highs on concerns a 110 billion euro EU/IMF bailout is not enough to avert default." As for the US Dollar, it rose against most other major currencies overnight "despite rising commodities and equities," reports IBTimes. "The move goes against recent trends as lately the dollar has gained largely as a benefactor of risk aversion, and not on its own legs. However..." There's always a "however," isn't there?
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