UK Stock Market Preview for 18 December 2025: BoE Rate Decision, Inflation Surprise, FTSE 100 Movers and Global Cues

London investors head into Thursday’s session (18/12/2025) with a single theme dominating the pre-open conversation: a surprise drop in UK inflation has strengthened expectations that the Bank of England will cut rates later today—and the market has already started repricing around that outcome. ^[1]

Wednesday’s trading delivered a textbook “rates down, risk up” response in London: the FTSE 100 climbed and rate-sensitive UK sectors—banks and homebuilders—helped lead the rally, while sterling weakened sharply after the inflation print. ^[2]

That said, the overnight global backdrop is less straightforward. US equities slid hard, with tech and chips hit by renewed worries about the sustainability of AI investment spending, even as oil jumped on fresh geopolitical tensionand precious metals surged, both of which can materially influence heavyweight FTSE names. ^[3]

Below is what to know before the London Stock Exchange opens, and what to watch through the day.

The headline driver: UK inflation fell to 3.2% and reshaped the rate narrative

The Office for National Statistics reported that CPI inflation eased to 3.2% year-on-year in November (down from 3.6% in October), while CPIH (the broader measure including owner occupiers’ housing costs) eased to 3.5% (from 3.8%). On the month, CPI fell -0.2%. ^[4]

A few details matter for markets because they feed directly into how “comfortable” the BoE can be about easing:

Food and non-alcoholic beverages and alcohol and tobacco were among the biggest downward drivers in the annual rate shift. ^[5]
Clothing and footwear inflation moved into negative territory year-on-year, with the ONS explicitly pointing to a higher proportion of discounting (including Black Friday effects). ^[6]
Core CPI cooled to 3.2% (from 3.4%), with the services rate easing to 4.4% (from 4.5%)—important because services inflation is often treated as a stickier gauge of domestic price pressure. ^[7]

In market terms, the key point is simple: the inflation surprise pulled forward rate-cut conviction, which then hit sterling and pushed gilt yields lower—moves that can quickly ripple into equity sector leadership. ^[8]

The main event today: Bank of England decision, vote split and guidance

The Bank of England’s Monetary Policy Summary and minutes are scheduled for release at 12:00 (UK time) on Thursday 18 December. ^[9]

Two facts frame how traders are approaching it:

Bank Rate is currently 4.00%, and 18 December is a scheduled policy decision date.
After the inflation release, markets moved to near certainty around a 25bp cut to 3.75%, according to Reuters reporting on interest-rate pricing and post-data market moves. ^[10]

What will matter more than the cut itself

By Thursday morning, a 25bp cut is the “base case” many investors believe the market has largely discounted. The bigger potential volatility triggers are:

The vote split (how close—or not—the committee is) and whether it signals consensus forming around additional easing. Reuters reporting has highlighted the possibility of another tight decision. ^[11]
Forward guidance language on inflation persistence versus labour-market cooling (a balancing act the BoE has been navigating for months). ^[12]
Any emphasis on “temporary” disinflation drivers (like discounting) versus genuine underlying cooling—because that shapes how far the market can push expectations for the 2026 path. ^[13]

Market recap from 17/12: FTSE 100 rose as banks and homebuilders led

London’s trading session on Wednesday was firmly influenced by the inflation shock.

Reuters reported that:

The FTSE 100 ended higher (up 0.9%) and the FTSE 250 also gained.
Homebuilders were among the strongest performers, with the sector rising around 2.5%.
Banks also rallied strongly, with Reuters noting the banking index hit its highest level since 2008.
Energy gained as oil rebounded, supporting heavyweight names. ^[14]

This leadership matters for Thursday because if the BoE delivers a cut but signals caution, you can see a different “next day” tape: rate-sensitive cyclicals can pause, while defensives or global earners can take the baton—especially if sterling continues to move.

Sterling and gilts: why FX and rates moves matter to Thursday’s open

Following the inflation print, sterling dropped sharply. Reuters described it as the biggest one-day fall in weeks, with the pound down about 0.7% against the dollar and weaker against the euro as rate-cut odds jumped. ^[15]

From an equity-market perspective:

A weaker pound often supports the FTSE 100, because many index heavyweights earn a large share of revenues overseas; those foreign earnings are worth more when translated back into pounds. IG highlighted this dynamic and linked Wednesday’s rally partly to sterling weakness. ^[16]
Falling yields can support domestic cyclicals—including homebuilders and interest-rate-sensitive mid-caps—by improving financing expectations and valuation maths. IG noted gilts fell across the curve, with two-year yields down around seven basis points on the day. ^[17]

The BoE outcome and tone can therefore swing sterling → rate expectations → sector leadership in a tight loop.

Global cues to watch: US tech selloff, oil spike, and a metals surge

Wall Street: tech and chips dragged indexes lower

US markets ended sharply lower on Wednesday, led by tech as investors reassessed the cost and payoff timeline of AI infrastructure spending.

Reuters reported:

Dow -0.47%, S&P 500 -1.16%, Nasdaq -1.81%, with the S&P and Nasdaq falling to three-week lows. ^[18]
Oracle fell after a report related to AI data-center funding uncertainty, and other AI-linked bellwethers—including Nvidia and Broadcom—also dropped. ^[19]

For the UK open, this mainly feeds into broader risk appetite and any London-listed names that trade with global tech sentiment (including semiconductor exposure in diversified funds and any “AI infrastructure” proxies).

Oil: geopolitics lifted crude off lows

Oil jumped on fresh geopolitical tension involving Venezuela. Reuters linked the move to a US-ordered “blockade” of sanctioned oil tankers, which helped lift energy shares. ^[20]

In London, that matters because BP and Shell are index heavyweights, and energy strength can offset weakness elsewhere—particularly in sessions where domestic UK factors are uncertain.

Precious metals: silver hit a record, gold rose

Reuters reported that spot silver hit an all-time high (above $66/oz) while gold gained, supported by rate-cut expectations and safe-haven demand. ^[21]

For UK equities, this puts a spotlight on London’s precious-metals and diversified miners at the open—especially if the metals rally holds into European hours.

UK stocks in focus: the biggest company headlines from 17/12

Beyond the macro story, several notable London-listed names delivered fresh news on Wednesday that could remain in play into Thursday’s session.

Serco: upgraded profit and cash expectations

Serco said it expects a strong 2025 performance, including:

revenue around £4.9 billion,
underlying operating profit around £270 million,
and higher free cash flow guidance of £170 million, alongside strong order intake. ^[22]

This kind of “guidance plus cash” update can keep the stock active even when the market’s attention is dominated by the BoE.

Bunzl: reiterated 2025 profit view, margins in focus

Bunzl’s trading statement pointed to adjusted operating profit expected to be in line with expectations, with operating margin around 7.6% (and the outlook for margins a key theme for investors). ^[23]

Greencore and Bakkavor: regulator clears deal with remedies

One of the day’s biggest UK corporate developments: Britain’s Competition and Markets Authority cleared the proposed Greencore–Bakkavor merger, accepting undertakings that addressed competition concerns. ^[24]

Bakkavor’s own update stated that the CMA accepted undertakings for Greencore to sell its Bristol chilled soups and sauces manufacturing site to Compleat Food Group. ^[25]

M&A progress like this can influence not only the two stocks, but also sentiment in the broader UK consumer/food manufacturing space.

Games Workshop: dividend declaration

Games Workshop declared a dividend of 50 pence per share, taking total dividends declared so far in FY 2025/26 to 375 pence per share, according to its RNS. ^[26]

IntegraFin: results, flows and dividend

IntegraFin reported full-year results showing:

underlying profit before tax up 7% to £75.4m,
underlying EPS 17.4p,
funds under direction up 16% to £74.2bn,
and a total dividend for the year of 11.3p. ^[27]

For UK financials, Thursday’s rate decision can influence sentiment toward platforms, asset managers and wealth-linked stocks—so names with fresh results can see amplified moves.

A policy headline worth noting: Britain to overhaul benchmark rules

Separate from the day-to-day market tape, the UK finance ministry said Britain plans to overhaul rules governing financial benchmarks—focusing regulation only on benchmarks posing significant systemic risk, and potentially shrinking the number of benchmark administrators by 80% to 90% under the proposals. ^[28]

This isn’t necessarily a “Thursday open” catalyst for the broad FTSE, but it’s a meaningful City-regulation story that investors in market infrastructure and data ecosystems will track into 2026. ^[29]

What to watch at the open on 18/12 and through Thursday

1) The pre-open “tell”: sterling and rate expectations

If sterling remains under pressure into the open, it may keep a bid under international earners (classic FTSE 100 behaviour). If sterling stabilises or bounces, leadership may rotate. ^[30]

2) Rate-sensitive UK sectors: banks, homebuilders, property-linked names

Wednesday’s winners were heavily tilted toward rate sensitivity. The question for Thursday is whether the BoE validatesmarket pricing—or pushes back with a cautious message. ^[31]

3) Midday volatility: the BoE release at 12:00

Expect a second wave of volatility around the BoE release time (and potentially a third wave if markets quickly reprice the 2026 path). ^[32]

4) Global risk tone: tech appetite vs commodity strength

Wall Street’s tech-led selloff is a reminder that global risk positioning is still fragile. But oil and metals strength can cushion London because of the FTSE’s sector mix. ^[33]

5) Year-end liquidity dynamics

Reuters reporting noted that Fed actions to support liquidity have helped calm some year-end funding jitters—useful context as markets move deeper into a seasonally thinner period where headlines can move prices more than usual. ^[34]

Bottom line for the UK market open

The London market goes into Thursday with momentum from Wednesday’s inflation-driven rally—but the real test is whether the Bank of England delivers not just a cut, but a message that matches (or challenges) the market’s increasingly confident easing narrative. ^[35]

If the BoE is dovish enough to validate expectations, rate-sensitive UK names could extend gains; if it’s more cautious than the market wants, sterling and gilt yields may snap back and prompt a sector reshuffle—especially with global tech sentiment already shaky. ^[36]

UK Inflation Drops, OpenAI in Talks to Raise $10B From Amazon | The Opening Trade 12/17