Pound and borrowing costs stabilise after market jitters
Published On Jan 14, 2025, 4:55 AM
The pound has stabilised around $1.22 after a recent drop to $1.21, its lowest level since November 2023. UK government borrowing costs also slightly decreased after a volatile period. The rising yields on UK gilts are in line with global trends of increasing borrowing costs, influenced by factors like predictions around U.S. inflation due to potential tariffs. Chancellor Rachel Reeves faces scrutiny following a trip to China amid these financial uncertainties, as rising costs may lead to future tax increases or spending reductions.
Stock Forecasts
FXB
Positive
With the pound stabilizing and a potential for government actions to address rising costs, there may be a cautious optimism in the UK markets. However, ongoing scrutiny of economic management could create volatility.
GBIL
Negative
The high yields on UK gilts indicate increased borrowing costs which could deter investment in UK bonds. If the government moves to cut spending or raise taxes, this could lead to negative sentiment towards UK assets.
Related News
Pound falls further as borrowing costs rise again
Jan 13, 2025, 5:52 AM
Experts say traders are reacting to a mix of global issues - but also to the UK government's Budget.
Pound falls as borrowing costs rise to highest since 2008
Jan 8, 2025, 12:29 PM
Economists have warned the rise could ultimately mean further tax rises or cuts to spending plans.