Concerns about the MPC’s commitment to its inflation target, weakening expectations for UK GDP growth relative to elsewhere and the loss of the triple-A credit rating have all weakened the pound since the start of year. A further fall is clearly possible, but there are in fact reasons to think that sterling might strengthen again soon. In our view, inflation is likely to fall eventually to a lower rate than investors expect, the UK economy should recover before the euro-zone and markets may soon reassess the creditworthiness of peripheral euro-zone governments.
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:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services