UK inflation likely to fall sharply, will lead to rate cut(June 7)

In the Asian session on Wednesday (June 7), GBP/USD rose to 1.2436, an increase of 0.10%. Economist Dean Turner said the current high yields on gilts offered investors a good entry point as yields were expected to fall in the short to medium term.

Bank of England dynamics

Yields won’t stay this high forever, so it’s still an attractive opportunity for them to lock in now, he said. Inflation in the UK is likely to fall sharply in the near term, leading the Bank of England to cut interest rates and pushing down gilt yields, the economist said. Yet another possibility is that the BoE could hike rates further, tipping the economy into recession, which would eventually (again) lead to lower yields.