Equities, high yield credit and sterling offer good valuations, while gilts are expensive and will suffer from the withdrawal of quantitative easing by the Bank of England, says Barclays Wealth.

As growth forecasts trend upwards, already robust forecasts for corporate profits are improving further, says the bank. Specifically, it likes UK equities, which can offer a hedge against domestic risk due to their high international exposure.

“We are generally positive on corporate assets globally. Valuations still look inexpensive in the case of equities and high-yield credit,” said Kevin Gardiner, head of investment strategy, EMEA.

Meanwhile, in terms of currency bets, the bank recommends going long on sterling and shorting the Japanese yen. This is because, as political uncertainty in the UK subsides, it will become clearer that the fiscal situation will be tackled. Conversely, the bank thinks rising global interest rates and commodity prices will hurt the yen.

“Our negative view on the Japanese yen is long-standing. Japan’s economy is among the weakest in the developed world, with deflation still a very real concern and more quantitative easing measures likely on the way,” said Brian Nick, investment strategist at Barclays Wealth.

In terms of inflation hedging, while inflation remains a concern, the short-term value of holding assets such as gold and inflation-linked bonds may be minimal, says the wealth manager. It prefers equities that offer an inflation hedge, such as well-known brands and regulated utitlies – both of which have pricing power, and actively managed real estate credit.