Bringing their rating to the same level as S&P and Fitch
It came very close to the end of the market , GBP weakened to below 1.3500 against the USD again , but there might be an extra reaction as the markets re-open Monday morning.
Speaking about timing right after Mrs May’s speech ….
Main reasons :
-Moody’s is no longer confident that the UK government will be able to secure a replacement free trade agreement with the EU
-The outlook for the UK’s public finances has weakened significantly since the negative outlook on the Aa1 rating was assigned, with the government’s fiscal consolidation plans increasingly in question and the debt burden expected to continue to rise
– Fiscal pressures will be exacerbated by the erosion of the UK’s medium-term economic strength that is likely to result from the manner of its departure from the European Union (EU), and by the increasingly apparent challenges to policy-making given the complexity of Brexit negotiations and associated domestic political dynamics.
Concurrently, Moody’s has also downgraded to Aa2 the Bank of England’s issuer and senior unsecured bond ratings from Aa1. The rating on its senior unsecured medium-term note (MTN) program was downgraded to (P)Aa2 from (P)Aa1. The short-term issuer ratings were affirmed at Prime-1. The ratings outlook was also changed to stable from negative.
The foreign and local currency bond ceilings and the local-currency deposit ceiling remain unchanged at Aaa/P-1. The foreign-currency long-term deposit ceiling was lowered to Aa2 from Aaa, and the short-term deposit ceilings remain P-1.
Link to the full article : https://www.moodys.com/research/Moodys-downgrades-UKs-rating-to-Aa2-changes-outlook-to-stable–PR_372649