UK Stock Market Today (17 December 2025): FTSE 100 Set to Jump as UK Inflation Drops to 3.2% Ahead of Bank of England Rate Decision

London shares are poised for a stronger start on Wednesday, 17 December 2025, after a sharper-than-expected drop in UK inflation reinforced expectations that the Bank of England will cut interest rates at its final policy meeting of the year on Thursday (18 December). ^[1]

UK stock market snapshot: what traders are watching this morning

Early indicators across UK markets point to a “rates relief” tone:

FTSE 100: called 0.7% higher at 9,754.19, recouping much of Tuesday’s slide. ^[2]
Sterling: weaker after the inflation surprise, with GBP around $1.33 in early London trading. ^[3]
Oil (Brent): firmer near $60 a barrel, a potential stabiliser for heavyweight energy names. ^[4]

This setup matters because the UK’s equity benchmarks are highly sensitive to shifts in rate expectations—especially through bank earnings assumptions, property and housebuilder sentiment, and the currency translation effect for globally exposed blue chips.

The main driver: UK inflation cools more than expected

The catalyst for today’s market repricing is November’s inflation data:

Headline CPI eased to 3.2% year-on-year (from 3.6% in October), below economist expectations of around 3.5%. ^[5]
Core inflation cooled to 3.2%, and services inflation eased to 4.4%—both important for the BoE’s view on underlying price persistence. ^[6]
Food inflation continued to slow, with food and non-alcoholic beverages rising 4.2% year-on-year and falling on the month—an unusual seasonal pattern that helped pull the overall rate lower. ^[7]

The takeaway for markets is simple: the inflation trend is moving in the “right direction” fast enough to make a December rate cut harder to resist.

Bank of England decision: rate-cut expectations harden, but the vote could still be close

With the BoE decision due Thursday, 18 December, markets moved to price a better-than-90% chance of a quarter-point cut, taking Bank Rate down from 4.00% to 3.75%. ^[8]

There’s also a strong expectation that the decision will be tight—investors and economists have repeatedly pointed to a potentially narrow split on the Monetary Policy Committee, where marginal shifts (including the governor’s stance) can be decisive. ^[9]

Economists polled by Reuters in the run-up to the meeting had already aligned around the idea of a December cut to 3.75%, with many also expecting another reduction in early 2026. ^[10]

Why “lower inflation” doesn’t automatically mean “easy policy”

Even with today’s softer print, the BoE still has reasons to be cautious:

UK inflation remains above the 2% target and has been described as elevated relative to peers. ^[11]
Reuters notes inflation is not expected to return to target until mid‑2027 in the baseline outlook referenced in current coverage. ^[12]
The Financial Times highlights the BoE’s own path: inflation forecast around 2.5% by late 2026 and returning to 2% in 2027—suggesting “progress,” but not a clean victory. ^[13]

That’s why Thursday’s message and voting pattern may matter as much as the headline rate move itself.

Sterling drops: why the pound matters for the FTSE 100

Sterling weakened after the inflation surprise, falling around 0.6% against the dollar in early reaction as traders leaned into rate-cut pricing. ^[14]

For UK equities, the pound’s direction can cut both ways:

A weaker GBP can boost the translated value of overseas earnings for multinational-heavy FTSE 100 constituents (think global pharma, consumer staples, energy majors and miners).
But it can also be read as a confidence signal: rapid sterling drops sometimes imply markets believe UK growth is soft enough to require faster easing.

In today’s context, the pound move is being interpreted primarily as a policy-path repricing—less “UK crisis,” more “BoE has room to cut.”

Energy and geopolitics back in focus: oil steadies near $60

Oil is back on the tape as a UK equity factor, with Brent trading higher into Wednesday. ^[15]

That comes after a fresh geopolitical jolt: Reuters reports U.S. President Donald Trump ordered a blockade of “sanctioned” oil tankers to and from Venezuela—news that helped lift crude prices amid broader supply/demand concerns. ^[16]

Why it matters for London:

BP and Shell are among the FTSE 100’s most influential names by index weight.
When oil slumps, they can drag the whole benchmark; when oil rebounds, they can provide a stabilising counterweight—especially on days when domestic cyclicals are reacting to rates.

UK corporate news: Bunzl in focus, Greencore deal clears a hurdle

While macro is dominating the narrative, several company-specific headlines are shaping the day’s risk appetite.

Bunzl reaffirms 2025 outlook

Distributor Bunzl reaffirmed its expectations for 2025, flagging that revenue growth is being driven more by acquisitions, with the group still describing the environment as “challenging” while pointing to improving momentum. ^[17]

Key figures being cited in market coverage include revenue guidance and an adjusted operating margin outlook (around 7.6%), alongside commentary about expected return to organic growth into 2026. ^[18]

Greencore–Bakkavor: UK regulator clears with undertakings

The UK Competition & Markets Authority accepted undertakings that clear Greencore’s takeover of Bakkavor without a phase-two probe, according to market briefings. The deal timetable outlined points to completion steps in January 2026. ^[19]

Broker calls: Admiral, Glencore, Hunting

Broker actions can be especially influential in year-end, lower-liquidity conditions. Among notable moves flagged in the pre-open brief:

UBS cut Admiral to neutral (with a stated price target). ^[20]
Berenberg upgraded Glencore to buy (raising its target). ^[21]
Jefferies cut Hunting to hold. ^[22]

Investment trust spotlight: Edinburgh Worldwide vs Saba

In the UK’s closed-end fund space, Edinburgh Worldwide Investment Trust said it received a requisition from Saba Capital seeking board changes—an example of activism that investors continue to monitor across discounted investment trusts. ^[23]

Analyst lens: “disinflation is happening,” but the details still matter

Markets love a clean headline, but strategists and economists are digging into what exactly drove the drop.

Capital Economics characterised the result as the third consecutive softer-than-expected inflation outcome and suggested inflation could fall toward 2% by spring, depending on the comparison effects and upcoming readings. ^[24]
Pantheon Macroeconomics noted that parts of the downside may be tied to volatile items or discounting dynamics (including early promotional activity), which could mean some inflation components “unwind” later even if the broader trend is down. ^[25]

This split—between a genuine disinflation trend and the risk of short-term distortions—is why Thursday’s BoE communication (and how confident or cautious it sounds) is a major swing factor for the rest of December trading.

What happens next: the catalysts that can move UK stocks after today

With the year-end stretch underway, three near-term triggers stand out for UK markets:

Bank of England decision (18 December)
Investors will focus on the rate move, the vote split, and any signals about how quickly further cuts could come. ^[26]
Global central bank week and U.S. data spillover
Reuters points to a broader wait-and-see mood across global markets ahead of key policy decisions and inflation readings, with cross-asset moves feeding into UK risk sentiment. ^[27]
Oil and geopolitics
Energy prices remain a direct lever for the FTSE 100’s heavyweight constituents, and Venezuela-related developments are one of several live geopolitical variables. ^[28]

Bottom line for the UK stock market today

The UK stock market’s early direction on 17 December 2025 is being shaped less by company fundamentals and more by a macro “hinge moment”: inflation undershot forecasts, sterling weakened, and the path looks clearer for the Bank of England to deliver a December rate cut.

For investors, the question now is not only whether the BoE cuts on Thursday, but how it frames the next steps—because the December story in UK equities is rapidly becoming a 2026 rates narrative. ^[29]