GBP/USD flat lined above 1.32 in Asia, ratings downgrade ignored?

GBP/USD pair is trading in the sideways manner around 1.3220 in Asia even though long duration gilt yields hit record low after S&P downgraded UK’s credit rating to AA, from AAA.

Ratings downgrade is a non-event

Japanese experience proves that a ratings downgrade has become a sort of non-event for the markets. For example, Japanese government bond yields have been on a one way ticket to record lows for last few years despite ratings downgrade.

On similar lines, UK’s credit rating downgrade dominated wires, but has received a lukewarm reception in Asia. Volatility may make a comeback at London open, although it could be due to political skirmishes and not because of the ratings downgrade.

GBP/USD Technical Levels

A break above immediate resistance at 1.33 (zero figure) would expose hourly chart hurdle of 1.3358. A violation there could yield 1.3442 (hourly 50-MA). On the other hand, breach of support at 1.32 would shift risk in favor of a drop to 1.30, which if breached could yield 1.2922 (100% Fibo exp of 1.5930-1.3835-1.5020).