Skip to main content

Worse to come, but UK assets to outperform in 2024

While an improvement in appetite for risk has fuelled a strong start to 2023 by UK equities and sterling, we doubt this will remain a source of support as recessions in the US, the UK and the euro-zone economies take hold. We anticipate the FTSE 100 will fall from about 7,750 now to around 7,000 in mid-2023 (6,800 previously) and the pound will depreciate from $1.24 now to about $1.12 ($1.10 previously). That said, our view that the Bank of England will cut interest rates in 2024 further than investors expect explains why we expect 10-year gilt yields to decline by more than in the US, from 3.35% now to about 2.50% by the end of 2024. And it also underlines why we think there is scope for UK assets to outperform global assets from the middle of 2023. We expect the FTSE 100 to climb by about 20% from 7,000 in mid-2023 to 9,500 by the end of 2024 and the pound to rally from $1.12 to $1.25.

Central Bank Drop-In (2nd Feb., 11:00 EST/16:00 GMT): Join us for this special 20-minute online session when we’ll be taking your questions and highlighting key takeaways from the first BoE, ECB and Fed policy decisions of the year. Register now.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services

Get access