Market Outlook: Growth Concerns in the UK Fail to Derail the Pound

UBS Global Wealth Management noted that increasing concerns about the weakening economic growth prospects in the UK are unlikely to reduce the pound's strength against non-dollar currencies. They mentioned that the UK manufacturing purchasing managers' index for December was revised downward on Thursday, but this should be offset by a stronger number in the services PMI next week. "This is significant given the recent emergence of concerns regarding GDP growth in the UK," UBS stated. Despite growth concerns in the UK, the Bank of England's slowdown in interest rate cuts provides fundamental support for the pound. This is particularly true against low-yield currencies such as the euro and the Swiss franc. UBS emphasized that the pound will remain the highest-yielding developed currency for a while longer.