UK Midcap Stocks and the Pound*

We think UK midcap stocks (FTSE 250) could do well this year, despite looming recession risk. The Bank of England is expected to raise rates a few more times in this cycle but the turmoil of the (brief) Truss regime is no longer dragging on UK investment sentiment. The BoE rate hikes may pause in H2 2023 as they will want to examine what the effect of previous hikes has been on inflation. The turn higher in the GBP/USD from $1.0380 (September 2022) to $1.2200 now partially reflects the improved prospects for the UK economy in a post-Truss era as well as market expectations that the Fed rate hike cycle may peak this year. We see a real prospect of GBP climbing above $1.30 in 2023, and for investment flow into the FTSE midcap index to build, potentially back to the 2021 highs. The iShares ETF (MIDD) below is an example of the FTSE 250 index, and the rally above the 50-week moving average underlines the improvement here.

*Important Disclaimer: This commentary is sourced from Tricio Investment Advisors Ltd ("Tricio"). It is for information only and the comments and forecasts are intended to be of a general nature and are current at the date of issue. Abbey Road IG Multi Family Office FZE and Tricio ("the Companies") take no responsibility for any individual investment decisions based thereon. The Companies provide this data on the understanding that the data is sourced from the public domain, and that while the Companies will endeavour to ensure the accuracy of the data, no responsibility is taken for any errors in the data and no responsibility or liability of any sort is taken for any losses that you or your company may incur, either directly or indirectly, through the use of this information. The Companies will take reasonable means to ensure that the reports arrive in a timely fashion but make no guarantees for any transmission errors or disruption of facsimile, electronic mail or other distribution means. Redistribution of our reports or email comments without the express written permission of the Companies is strictly prohibited and we will prosecute offenders to the full extent of the law. This includes photocopying, faxing, electronic distribution and any other unauthorised distribution.