Domestic investors now hold most UK gilts, reducing foreign exposure and limiting downside pressure on the Pound despite rising fiscal risks.
Shifting ownership patterns in the UK gilt market are cushioning the Pound against fiscal risks, analysts said. Foreign investors have scaled back exposure, leaving domestic buyers as the dominant force in the market.
This shift follows a period of heightened volatility and concerns over UK fiscal policy. With domestic demand absorbing most gilt issuance, the GBP faces less downward pressure than in previous cycles of fiscal uncertainty.
The change in ownership dynamics suggests limited near-term downside for the currency, even as broader economic risks persist.