14 March 2023 - SMEs remain cautious despite overall sense of optimism

In another blow to the already fragile UK housing market, concerns are growing that borrowers will be unable to afford their mortgage repayments if interest rates continue to rise. Although there isn’t a great deal of evidence that households have overleveraged in the manner seen a few years ago when lenders were happy to advance 110% of the value of the security offered, confident that property values would soon catch up, mortgage payments are set to continue to rise with lenders unwilling to allow borrowers to lock-in a fixed rate given the volatility of the market. The Bank of England is widely expected to raise interest rates again at the March meeting, which will take place next week. While the three independent members of the MPC have been vociferous in expressing their voting intentions, it is unclear if the Bank of England officials who make up the bulk of the committee will vote for a twenty-five or fifty basis point hike. The British Chambers of Commerce published a review of the UK economy yesterday, in which it reported that its members believe that there is a possibility that over the first two quarters of 2023 there will be a technical recession with GDP contracting moderately, but seeing growth returning in the second half of the year. This is not a widely held view given the data that has been delivered since the turn of the year. Beyond Currency Market Commentary: Aims to provide deep insights into the political and economic events worldwide that can cause currencies to change and how this can affect your FX Exposure.