He Bank of England He felled with respect to his peers in terms of interest rates. The conditions of the British labor market and inflation in the United Kingdom prevented the monetary policy of the sterling pound from becoming more flexible at the same rate as the European or that of the United States Federal Reserve. However, this Thursday a New 25 basic point cut that would give the British stock exchange the opportunity to be a refuge for investors in full tariff war on a global scale.
The European Central Bank accumulates in its process of flexibility of monetary policy five interest rates since June 2024. There are 125 basic points to 2.75% (deposit rate) currently compared to 4.75% of the Bank of England that only cut 50 basic points Since August of last year. If the market expectations of another adjustment of 25 basic points are met, the reference would be at the end of February at 4.5%.
The differential between the types in the eurozone and the United Kingdom will continue above the 100 basic points during most of the 2025 if the evolution of the financial assets is attended (Overnight Indexed Swapsin English, which reflect the interbank exchange rate and are used to project interest rates in the short and medium term). But this difference can function as a claim for investors In a context of the United States tariff war with China, Canada and Mexico and surely also with Eurozone according to Donald Trump’s words. However, the United Kingdom would be exempt from the commercial rifirrafe to date.
“The stars are being aligned for the actions of the United Kingdom, which are already considered a shelter against the tariff crisis that threatens Europe and other markets,” says the expert of BloombergMichael Msika. The FTSE 100 advances 5% in the year, but has a potential of 13% according to the market consensus that it collects Bloomberg What the index sees over 9,716.9 points. And is that the 75% of the income generated by index companies comes from outside Britain (almost a third of the United States) and these could be maximized if the sterling pound maintains or expands its weakness against the dollar and the euro.
A priori, the market advances between three and four cuts more than 25 basic points each by the Bank of England for this 2025. This is a cut more than planned on January 1. “If the Bank of England implements more rates cuts than expected, the depreciation resulting from the Libra could promote the performance of the FTSE 100“said Société analyst Générale, Kevin Redureau.
The sterling pound lost ground against the dollar during most of January (as well as the euro compared to the American currency). This was due to the market reading of a stronger dollar in case of a global commercial war. However, US negotiations with Mexico and Canada reduced this sensation of greater inflation in 2025 and allowed coins such as Libra recover everything lost in the currency market. The pound is changed to 1.25 dollars that imply recovering against the dollar until they advance 0.5% in 2025. and in front of the euro flat quotes in the whole of the year.
On the other hand, the expectation of a more lax monetary policy by the Bank of England from the meeting of this Thursday relieves the British debt market tension. The ten -year debt offers less than 4.5% profitability in the secondary market. That is, it is equated with the return of the American bond with the same expiration.
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