The City refused to panic over the loss of the UK’s AAA rating today as shares headed higher and sterling avoided a major sell-off.
The first chance for shares in London to react to the historic downgrade from credit ratings agency Moody’s late on Friday saw the FTSE 100 blue-chip benchmark gain 29.39 points to 6365.09.
The pound touched a 16-month low against the euro but largely held its ground against the dollar, staying above $1.51 as analysts said the long-anticipated ratings cut had been priced in. The government’s cost of borrowing for 10 years barely moved.
Glenn Uniacke, senior dealer at foreign exchange specialist Moneycorp, said: “We haven’t had a ‘burst the dam’ moment. People are overstating the impact of this when it is a symptom not a cause.
“The key problem is that in the absence of bad news on the eurozone, people are re-examining their sterling holdings.”
