Content and data provided by various third parties and Fidelity - Terms of Use
Print.Print
Small font size A Larger text size A Largest text size A

MUFG Still Sees Weaker Sterling This Year Despite Stronger November GDP

BY MT Newswires | ECONOMIC | 01/15/26 06:24 AM EST

06:24 AM EST, 01/15/2026 (MT Newswires) -- MUFG said the Bank of England is expected to cut rates by a further 50bps this year.

Yields in the United Kingdom are still under downward pressure at the start of this year both at the short and long end of the curve, wrote the bank in a note to clients. The 10-year Gilt yield has fallen to its lowest level since the end of 2024.

It fits with MUFG's view for slowing inflation in the United Kingdom and further BoE rate cuts this year, which the bank expects to result in a weaker sterling (GBP) against the euro (EUR). Sterling has derived some support early Thursday though from the release of the latest monthly U.K. gross domestic product for November, which revealed stronger growth of 0.3% month over month despite budget uncertainty.

Even if U.K. growth is flat in December, it would leave GDP on track to expand by 0.2% in Q4, stated MUFG. At the last BoE Monetary Policy Committee meeting, the BoE staff were expecting flat growth in Q4.

While the upside growth surprise is a welcome development, it doesn't significantly alter MUFG's expectations for further BoE cuts and a weaker sterling this year.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

More Fixed Income News

All Fixed Income News

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

© 1998 – 2014 FMR LLC.

All rights reserved.
fir_news_article