UK GDP growth accelerated to 0.6% in the second quarter, and the latest PMI data underscores contrasts with its DM counterparts (see The Numbers). Several tailwinds are supporting the UK economy. Two-year Gilt yields have…
What do the mixed signals sent by the UK economy mean for the Bank of England, and what are the implications for Gilts and the British pound?
The Bank of England (BoE) lowered its policy rate by 25 basis points to 5% at its meeting on Thursday. While the move was expected, the governing board was split, voting 5 – 4 in favor of reducing the key interest rate.…
Investors hope that the ECB rate cuts priced into the curve will be sufficient to achieve a soft landing in Europe. History argues against this view, but will this time be different?
UK’s CPI growth stands right on the Bank of England’s (BoE) 2% target. However, services inflation remains sticky, growing at a constant 5.7% y/y in June. Moreover, the deceleration in wage growth remains insufficient…
We review some of the key data releases this week that we find have an impact on our currency strategy. Long yen positions make sense today. Long sterling and the euro bets are more of a judgment call, and we will fade any strength…
The real threat to European equities is growth, not political risk. How low will Eurozone earnings fall during the coming recession and how much will equities decline in response?
Investors in European sovereign bonds should find solace that continental voters are not turning away from support for EU integration. As such, populist parties are not really that “far” left or right. And as long as they want to…
The Labour Party won the UK election, just as BCA Research’s Geopolitical Strategy service predicted back in 2022. However, this win is unlikely to rock the proverbial geopolitical boat. Popular enthusiasm for Sir Keir…
The new Labour government will have flexibility to respond to macro shocks, which is positive for the UK in general, namely GBP-EUR, and also gilts in absolute terms. But over the long run, tax hikes will likely surprise to the…