Cameron Faith in Ratings That Don’t Matter Hurts Pound

The spending cuts that helped the U.K. preserve its AAA credit rating last year and bolstered the pound are now weighing on the currency as investors lose confidence that Prime Minister David Cameron will revive economic growth.

Sterling had its worst January since 2008 against a basket of nine developed-market peers, falling 0.6 percent, after a 3.1 percent advance in the second half of 2011, according to data compiled by Bloomberg. Gilts are lagging behind lower-rated Treasuries, after world-beating gains of almost 17 percent last year.