The pound rebounded against the dollar after weakening yesterday as Standard & Poor’s lowered the U.K.’s credit rating outlook to negative from stable, citing weak economic growth and a worsening debt profile. Sterling depreciated for a fourth day versus the euro. S&P’s move brought the U.K.’s rating outlook in line with Moody’s Investors Service and Fitch Ratings. Bank of England Markets Director Paul Fisher told Reuters yesterday the U.K. economy will pick up slowly during next year and the deflation risk has subsided, reducing the need to “do asset purchases in large scale.� “The S&P’s decision reinforced what the market already knew about the U.K. which is its weak economic outlook,� Nick Bennenbroek, the head of currency strategy at Wells Fargo Bank NA in New York, said yesterday. “We are neutral about the pound, and won’t change our view based on this. The debate will be whether weak economic data will force resumption of the Bank of England’s quantitative easing, which is negative for the pound.� Sterling climbed 0.2 percent to $1.6138 at 7:55 a.m. London time after falling as much as 0.4 percent yesterday. It depreciated 0.2 percent to 81.28 pence per euro. The pound has gained 1.1 percent this year, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro declined 1.7 percent and the dollar fell 3 percent. To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

Source