The recent drop in core inflation from 3.6% to 3.2%, alongside the overall slowdown, suggests that the BoE will likely maintain gradual 25-basis-point rate cuts from November onwards. We think rates will ultimately come down to 3%," he notes.
As the pound can be expected to continue to weaken as rates are cut, investors face challenges, particularly those holding foreign assets or UK assets with international exposure.
On the flip side, international investors may find opportunities in undervalued UK equities and real estate as the currency weakens.
British exporters stand to gain a competitive edge as their products become more affordable for international buyers. Investors should look to sectors like pharmaceuticals, tech, and aerospace, which are well-positioned to benefit from global demand.
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