UK equities shrug off downgrade but gilt yields climb

Yields on UK government debt were climbing early this morning following Moody's decision to downgrade the UK's credit rating to Aa1, but equity investors shrugged off the news to send markets higher.

The yield on the benchmark 10-year gilt rose 0.04bps to 2.16%, as investors reacted to the move by the credit ratings agency. However, while yields rose, they remain well below the year high of 2.44% seen last March. Commentators noted that with a central bank willing to undertake more QE, there is little risk of gilt markets selling-off hugely as a result of the downgrade. The real pain will come in the forex markets instead. Sterling fell to a two-year low against the dollar on Friday evening after the downgrade announcement, dropping through $1.52, and that weakness continued in...