Buffeted by global forces - Capital Economics
UK Markets

Buffeted by global forces

UK Markets Outlook
Written by Capital Economics Economist
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For the remainder of this year UK assets will probably be buffeted by global trends, resulting in UK equity prices falling by about 10%, 10-year gilt yields declining from 1.05% to around 1.00% and the pound weakening from $1.29 to about $1.25. But if a Brexit deal later this year allows UK economic growth to accelerate in 2020 and 2021, then domestic factors will probably take over as the main driver of UK asset prices. We suspect that by the end of 2021, UK equity prices will have regained all their losses and higher interest rates will have contributed to 10-year gilt yields rising to about 2.00% and the pound climbing to around $1.40.