Fitch Ratings has said that President Mohamed Morsy's removal of the two senior leaders of the Supreme Council of the Armed Forces is a positive step towards establishing a better relationship between the country's military and civilian powers.

On Sunday, former Defense Minister Hussein Tantawi and former army chief Sami Anan were referred to retirement. Besides removing both generals Sunday, Morsy also appointed Mahmoud Mekky as his vice president, Lieutenant General Abdel Fattah al-Sisi as the new defense minister, and Sidqy Sobhy as the new army chief of staff.

Fitch Ratings added in a statement that this decision, along with Morsy’s reversal of a constitutional decree that increased the military's power, “need not therefore signal a worsening of relations with the military. Rather, it seems that the president and military want to forge a working relationship.”

But the rating agency said, however, that Egypt remains in political limbo since it has no parliament or constitution.

In June, Fitch Ratings had downgraded Egypt to 'B+' due to the uncertainty of the political situation in the country after the Supreme Constitutional Court ruled that the elections of the last parliamentary elections are unconstitutional.

It said that “It remains unclear how and when Egypt will get a new constitution and the process would be likely to take at least three months. Therefore our concerns are unlikely to be resolved this year, keeping downward pressure on the rating. This is reflected in the negative outlook.”