Pound Tumbles: Is Britain Set To Join The PIGS?

The pound fell sharply in early morning trade after S&P revised down U.K. outlook to negative from stable, saying that the U.K. debt burden could approach 100% of GDP and remain near that level in the medium term.

If Britain were to lose it's top credit-rating for the first time, then we would join the PIGS (Portugal, Ireland, Greece and Spain) as the fifth western European nation to do so since the current economic malaise hit.

Sterling took a nose-dive on the news, despite other data revealing that retail sales grew by 0.9% in April, more than the 0.5% expected. The ONS said retail sales value was 3% higher than in April 2008, although that may have more to do with Easter being early last year than anything else.

The pound slumped from an early morning high above $1.58 to around $1.56 by 10am BST.