Liquidity Preference Immune to Guidance Tweaks (so far)
The policy implications from the BoE’s inflation reports will dominate proceedings for short-dated interest rates, and sterling by extension. However, for investors looking at structural trends and concerned about the nature of the UK’s economic growth, any form of MPC guidance seems to matter far less. Liquidity preference for sterling remains highly challenged, for which stable FDI flows will struggle to compensate.
Read the full report: UBS