Moody's lowered growth forecasts for the UK and Eurozone

US ratings agency Moody’s Investors Service has slashed growth forecasts for the UK and the Eurozone, citing crumbling confidence in the wake of Brexit as the key reason.

UK GDP forecasts:

Moody’s lowered UK 2016 growth expectation to 1.5% from 1.8% prior and 2017 growth expectation to 1.2% from 2.1% previously. 

Eurozone GDP forecasts:

The agency also lowered its euro area 2016 growth expectations to 1.5 percent from 1.7 percent prior and 2017 growth expectations to 1.3 percent from 1.6 percent previously.

The agency noted that the British electorate’s vote to leave the European Union will likely result in a shock to confidence that will curb UK economic growth. It added that the uncertainty around UK's future prospects outside of EU will likely dampen business investment and consumer spending.

Moody’s said the direct impact on growth in the EU will be less significant, due to limited EU exposure to direct economic and trade linkages. The single currency came under mild selling pressure after headlines of forecast revision hit the wires, hit lows of 1.1057 against the greenback.