With the British pound and bond yields falling, analysts at J.P. Morgan are sticking with their overweight call on U.K. stocks, brushing off downbeat economic data in the wake of the country's Brexit vote to leave the European Union .
J.P. Morgan revisited its overweight call in the wake of the first wave of post-Brexit economic numbers.
Its upgrade of U.K. equities earlier this year "was clearly not based on the view that Brexit would happen," said J.P. Morgan equity strategists, led by Mislav Matejka , in a research note.
However, "we believed that the U.K. would be the outperformer even in the case of Brexit and the key drivers of our bullish view on the region still hold," they said.
Those drivers including the pummeling of the pound after the U.K. voted to leave the European Union on June 23 , making sterling the worst performing currency this year.
"This is a big positive for U.K. equities, as they derive most of their profits from abroad. 72% of FTSE 100 revenues are generated outside the U.K. ," the analysts said. Now, revisions to per-share earnings "are outright positive for the first time in four years, which is to a large extent the result of weakening GBP."
The pound's dive, which took the currency to a 31-year low against the dollar, has helped the FTSE 100 claw back the slide of 8.7% it suffered after the unexpected referendum result. The benchmark equity index is posting a year-to-date rise of 11%, and it's at its best level since July 2015 .
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