Technical distortions to UK market

When forecasting the future for UK bonds, the usual starting point is the outlook for the economy and the prospect for inflation. However, there are now a large number of technical factors that will have a distorting effect on the market. Given the relative openness of the UK economy and sterling's recent volatility, any current analysis has to take into account the level of the currency. During 1999, the UK benefited from a pick-up in world trade and this was reflected in strong export growth. Hence much of the adverse economic impact of sterling's strength was obscured. However, the ...