The economic backdrop heading into 2026 is unusual. Growth remains resilient, yet recession probability remains elevated. We are clearly in a late cycle environment, though one where the usual excesses have yet to appear as AI investment offsets traditional headwinds. The easy gains from valuation expansion are most likely behind us.

For cross-border investors managing wealth between the UK and US, this period highlighted both the challenges and opportunities inherent in navigating divergent monetary policies and currency movements. Regional performance differences created distinct investment themes that required careful analysis and positioning.

In this article, we break down the key reasons for the pound's resurgence and look at what the major institutions are forecasting for the months ahead.