What Brexit? Investors snap up UK assets days before EU split

In the week which included Johnson's election victory, over US$1 billion was invested into UK equity mutual funds, with the net flow rising to about US$1.9 billion through the week ending Jan 15. Sterling issuance in Europe's publicly syndicated debt market has set a record in January at £24.4 billion , according to data compiled by Bloomberg.

The pound's final days with Britain still in the EU may turn into a tug-of-war between the upside from renewed economic optimism and the downside from the potential interest-rate cut. Yet, the currency betrayed little nervousness ahead of the Jan 30 decision, staying above the psychological US$1.30 mark and several technical support levels.

That's a turnaround for a currency that has declined 12 per cent in the 43 months since Britons voted to exit the EU. Longer term, UK assets could face pressure if trade talks turn sour with Brussels. "Why the pound has struggled to really sell off hard, even when BOE-cut expectations hit 70 per cent, is a function of overseas investors having been underweight in UK assets since the referendum," said Neil Jones, the head of currency sales for financial institutions at Mizuho Bank in London."Now, they're beginning to address that balance by buying into sterling-denominated bonds, stocks, real estate and companies.

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