Borrowing costs fall and pound rises after inflation surprise
Published On Jan 15, 2025, 2:12 PM
UK government borrowing costs have decreased significantly following a surprising drop in inflation to 2.5% in December. This easing of inflation has led to increasing speculation about potential interest rate cuts by the Bank of England, as well as similar trends observed in the US where core inflation fell. Market analysts are now betting on possible rate cuts in the coming months, resulting in a rise in share prices and a strengthening of the pound, currently valued at around $1.22. Despite the recent decline in borrowing costs, concerns regarding the UK's overall debt levels remain.
Stock Forecasts
EWU
Positive
Given the decrease in borrowing costs and dropping inflation, which may lead to interest rate cuts, UK equities and the pound (GBP) could see positive momentum in the near term. Investors might look at UK-focused ETFs or stocks that would benefit from lower borrowing costs.
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