The FTSE 100 closed 2017 at a record high of 7,687, up 7.6 per cent on the year. The pound appreciated against the dollar by about 10 per cent during the year, its strongest performance since 2009. And sterling has recovered from its lows against the euro; in August it was trading at about €1.08 and is now at €1.13. Are sterling-denominated assets set for recovery?

It’s not possible to predict short-run asset returns with consistent accuracy, but there are few grounds for long-term optimism. On the contrary, the signs are that the British economy is going to face a painful adjustment and something will have to give. Prolonged sterling weakness is one way in which the adjustment may take place, and it will be