U.K. Markets Escape Brexit Deadline to Face New Fiscal Risks
- Gilts set to underperform German bunds before budget, UBP says
- Brexit trade talks still threaten to curtail pound rally: CA
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Just as British politics looked to be quietening down for market traders, the finance minister’s surprise departure is leading to predictions of a spending bonanza.
That has investors preparing for U.K. government bonds to weaken relative to their peers, taking the shine off this year’s rally. Greater infrastructure investment aimed at boosting the economy may give the pound a temporary lift, yet longer-term sentiment is still shaky given tough talks over a trading relationship with the European Union still lie ahead.