Despite today’s big reaction in markets in the UK to better-than-expected inflation news, we still think investors are overestimating the peak in interest rates there and underestimating how much monetary policy will be eased in 2024 and beyond. Indeed, even though we’ve nudged up our near-term forecast for Bank Rate, we now project that the 10-year Gilt yield will fall a bit more by the end of 2023 than we previously thought. And we still expect cable to come under extra pressure, as appetite for risk wanes.
In view of the wider interest, we are also sending this Global Markets Update to clients of our FX Markets and UK Markets services.
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