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2026-11-05 21:00:37
[eToro Strategist: Market Pricing of Rate Hikes May Be Overdone; UK Bonds and Domestic Demand Sector Expected to Benefit] ⑴ eToro's global market strategist stated that Governor Bailey has hinted at the possibility of another rate hike, but cautioned against expecting a prolonged sequence of increases. ⑵ The strategist noted that the market had previously priced in rates to rise to around 4.75% to 5%, but Bank of England forecasts indicate that inflation will not fall below the 2% target until 2029 under this path, meaning that fewer rate hikes may ultimately be needed. ⑶ The strategist stated that if investors begin to lower their expectations, UK government bonds may benefit from lower yields, and lower borrowing costs could ultimately support sectors such as homebuilders, real estate, and consumer-facing businesses. ⑷ The strategist noted that the pound strengthened against the dollar and euro this week, and could face pressure if expectations of further tightening weaken.
