UK Stock Market Today: FTSE 100 Holds Near 9,800 Ahead of Bank of England Rate Cut Decision (18 December 2025)

London equities traded cautiously higher by mid-morning on Thursday as investors positioned for the Bank of England’s final policy decision of 2025, due at 12:00 GMT. With UK inflation cooling faster than expected and growth showing fresh signs of strain, the market is braced for a widely expected 25-basis-point rate cut—but traders are watching just as closely for what comes after the cut: the vote split, the tone of the minutes, and whether policymakers hint at further easing in 2026. ^[1]

By around 10:45 AM GMT, the FTSE 100 hovered around the 9,800 mark, up roughly 0.3%, while the more UK-focused FTSE 250 rose about 0.36%. Retailers and defence names led the gains, while miners and healthcare lagged—classic “wait-and-see” positioning before a major central bank event. ^[2]

UK market snapshot at 10:45 AM GMT

Here’s what stood out in the London market in late morning trade:

FTSE 100: around 9,800, up about 0.3%; day range roughly 9,770–9,806 (delayed pricing) ^[3]
FTSE 250: around 22,245, up about 0.36%; day range roughly 22,165–22,248 (delayed pricing) ^[4]
Market leadership: retailers and select domestic cyclicals outperformed; defensives were mixed ^[5]
Key macro catalyst: BoE decision and minutes at 12:00 GMT ^[6]

The bigger backdrop: the FTSE 100’s steady grind higher in 2025 has left the index on track for its best year since 2009, up about 20% year-to-date, outperforming the S&P 500’s gain of roughly 14.3% this year. ^[7]

Why UK shares are edging up: all roads lead to the Bank of England

The dominant driver of the UK stock market today is the expectation that the Bank of England will cut Bank Rate from 4.00% to 3.75%, a move that would mark its fourth cut of 2025 (and the sixth cut in the current easing cycle, according to Reuters’ reporting). ^[8]

Markets have moved decisively toward a pre-Christmas cut after November CPI fell to 3.2%, a sharper drop than expected, reinforcing the view that inflationary pressure is easing just as the economy loses momentum. ^[9]

But this is not a simple “rates down, stocks up” session—because investors see real constraints on how fast and how far the BoE can go:

Inflation is still the highest in the G7, even after the drop, and services inflation remains a key concern for policymakers. ^[10]
The Monetary Policy Committee has been closely split, raising the odds the Bank cuts while still signalling caution. ^[11]
Market pricing implies only limited further easing in 2026—a critical detail for rate-sensitive sectors like banks, housebuilders, and consumer discretionary. ^[12]

In other words: investors aren’t only betting on the cut itself; they’re betting on how the BoE frames it.

The FTSE 100’s biggest movers: Whitbread surges, defensives drag

Whitbread jumps after activist pressure

Whitbread (Premier Inn owner) was the standout among large caps, rising sharply after activist investor Corvex disclosed a stake and called for a strategic review. ^[13]

This matters beyond a single stock: activism-driven moves can add an extra tailwind to UK equities during periods when the macro story (rates, growth, inflation) is dominating everything else.

Retail strength shows up in the index

The FTSE 350 retail sector led gains, reflecting a mix of company-specific catalysts and hopes that lower rates could eventually ease pressure on household budgets and financing conditions. ^[14]

Where the FTSE 100 was weaker

The day’s soft spots were also familiar:

Precious metal & mining stocks slipped as gold prices softened ^[15]
Healthcare names weighed on broader European sentiment, including in London ^[16]

Among the notable FTSE 100 fallers by late morning were DCC, United Utilities, GSK, Fresnillo, NatWest, and others (based on delayed pricing lists). ^[17]

FTSE 250 watch: Currys jumps double-digits as UK domestics react to the rate outlook

If the FTSE 100 is often driven by global factors (commodities, international revenues, dollar moves), the FTSE 250 is where the “UK economy” trade shows up most clearly—especially on a BoE day.

Currys rallies on profit news

Currys surged by around 10% after reporting a more than doubling in first-half profit, lifting sentiment across parts of the retail complex. ^[18]

The pop matters because it reinforces a theme investors have revisited repeatedly in late 2025: even with consumers under pressure, well-executed UK retailers can still surprise on profitability and cash discipline—particularly if financing costs start easing into 2026.

Other notable mid-cap gainers

Alongside Currys, the FTSE 250 risers list included names such as Ocado, Frasers Group, SSP Group, JD Wetherspoon, WH Smith, CMC Markets, and others (again, delayed pricing). ^[19]

Mid-cap laggards

On the downside, the FTSE 250 fallers list featured names including Aston Martin Lagonda, Future, Hays, and several investment trusts. ^[20]

Sterling and gilts: markets brace for the “tone” of the cut

Pound softer ahead of the decision

In FX markets, sterling stayed under pressure after the inflation surprise, with Reuters reporting the pound around $1.3348 and weaker versus the euro near 87.85 pence ahead of the BoE decision. ^[21]

Traders are focused on a familiar risk: if the Bank cuts but sounds cautious (a “hawkish cut”), sterling can stabilize—while rate-sensitive UK equities may find it harder to extend gains. Conversely, a cut paired with a more dovish set of minutes could weigh on the pound while boosting domestically geared shares.

Bond market positioning suggests easing expectations are embedded

UK government bond yields also reflected heavy anticipation of a quarter-point cut.

Short-dated gilts: The UK 0–2 year area showed yields around the high-3% range in late morning updates (e.g., a 2027 gilt around 3.7%). ^[22]
7–10 year area: Yields were around the mid-4% range (e.g., a 2034 gilt around 4.4%). ^[23]

That’s consistent with the broader market narrative: investors expect easing, but not an aggressive “rush” lower in rates.

Forecasts and analysis: how far could UK rates fall in 2026?

Today’s most important forecasts aren’t about whether the BoE cuts—it’s about the path from here.

Reuters analysis: the “real rates” problem

A Reuters market column highlighted a key argument behind today’s cut expectations: with inflation falling, inflation-adjusted (“real”) interest rates can rise even if the policy rate stays still, effectively tightening financial conditions at the worst moment for growth. ^[24]

The same analysis also flagged the tension at the heart of the BoE story:

A cut looks likely, but
the Bank may be reluctant to signal rapid easing,
even though markets are debating whether the BoE is at risk of moving too slowly as the economy weakens. ^[25]

Reuters expectations: a cut now, limited cuts later

Reuters reporting also underscores that markets have been pricing only one additional cut in 2026, even after the inflation drop boosted easing bets. ^[26]

That “higher-for-longer, but slowly drifting down” outlook is one reason UK bank shares haven’t collapsed into a cut—and why investors remain picky, focusing on balance-sheet quality, capital returns, and credit risk.

Financial Times view: banks see borrowing costs easing through 2026

A separate Financial Times report said investment banks expect UK borrowing costs to fall further in 2026, with forecasts for the 10-year gilt yield around 4.32% by end-2026 (from levels around the mid-4% area now). ^[27]

If that scenario plays out, it could support:

rate-sensitive UK domestic sectors (housebuilders, REITs, consumer discretionary), and
a continued rotation into areas of the UK market that benefit from easing financial conditions—while potentially capping upside for some bank earnings momentum.

What happens next: the three signals markets will watch at 12:00 GMT

The BoE publishes its Monetary Policy Summary and minutes at 12:00 GMT. ^[28]

For the UK stock market today, three details may matter more than the headline cut itself:

The vote split: A narrow decision can signal caution and limit expectations for further cuts. ^[29]
Guidance on inflation risks: Especially services inflation and wage dynamics. ^[30]
How the Bank frames the outlook for 2026: Whether it calls the cut “insurance” against a slowdown or the start of a more sustained easing path. ^[31]

Beyond the BoE, broader risk appetite in Europe is being shaped by an active global calendar—most notably the ECB decision and US inflation data, which Reuters noted were also keeping European markets generally muted. ^[32]

Bottom line: UK stocks are higher, but conviction comes after the BoE

As of 10:45 AM GMT on 18 December 2025, the UK stock market was in positive territory, with the FTSE 100 up ~0.3% and the FTSE 250 up ~0.36%—a measured rally led by retailers and specific corporate catalysts (notably Currys and Whitbread) as investors waited for the Bank of England’s noon decision. ^[33]

The next move likely won’t be decided by the cut itself—almost everyone expects that—but by whether the BoE confirms the market’s belief that inflation is rolling over enough to justify more easing in 2026, or whether policymakers push back and keep financial conditions tighter for longer. ^[34]

FTSE 100 Surges on Rate Cut Hopes #StockMarket #FTSE100 #RateCutHopes