LONDON (5:15pm GMT, Thursday 18 December 2025) — UK shares ended higher on Thursday as the Bank of England delivered a widely expected interest-rate cut, while a softer-than-forecast US inflation print lifted global risk appetite and helped underpin a late-December rally in rate-sensitive sectors such as retail and hospitality.
By the London close, the FTSE 100 rose 0.7% to 9,841.55, its strongest finish in more than five weeks, and the domestically focused FTSE 250 climbed 0.7% to 22,314.34.
UK stock market close: FTSE 100 and FTSE 250 key levels
London’s session was ultimately defined by a “macro + micro” mix: central-bank decisions and inflation data on the one hand, and company-specific catalysts on the other.
At a glance (London close):
- FTSE 100: 9,841.55, +0.69%
- FTSE 250: 22,314.34, +0.67%
The day’s leadership was notable: retail and hospitality outperformed as investors leaned into the idea that lower borrowing costs can support discretionary demand—especially important heading into the final stretch before Christmas.
Bank of England cuts rates to 3.75% — and the market reaction turns “hawkish”
The Bank of England cut Bank Rate by 25 basis points to 3.75%, a near three-year low, but the market’s immediate reaction wasn’t a straightforward “rates down, pound down, yields down” move.
Policymakers were split 5–4, and the narrow margin mattered. In markets, a close vote can signal reluctance to keep easing—especially when inflation is falling but not yet back at target.
Why sterling rose even after a rate cut
Immediately after the decision, sterling strengthened and short-dated gilt yields rose, a classic sign that traders interpreted the cut as relatively cautious (or “hawkish”) in tone.
Reuters reported the pound climbed to around $1.34 at its session high after the decision, while two-year gilt yieldsbriefly rose to roughly 3.77% as traders recalibrated expectations for how far and how fast rates can fall from here.
Strategists framed it as a “positioning” event as much as a policy event: with the cut largely priced in, the surprise was the persistence of a hawkish bloc on the MPC—and that helped keep sterling supported. Reuters
What this means for UK equities
For the FTSE 100, the rate cut can pull in opposite directions:
- Supportive for domestic cyclicals (consumer-facing names, housebuilders, travel/leisure), because lower rates can ease financial pressure on households and businesses.
- Less supportive for banks’ net interest margins in a simple model (though bank shares can still rise if investors expect improved loan demand or fewer defaults).
- A potential headwind for internationally exposed earners when sterling rises, since a stronger pound can reduce the value of overseas earnings when translated back to pounds.
Thursday’s tape suggested the domestic side of that equation mattered more by the close, with retail and hospitality standing out.
Top UK share movers today: Whitbread, Currys, and a retail-led surge
Whitbread jumps after activist Corvex presses for a strategic review
Whitbread (Premier Inn owner) was among the day’s biggest winners after activist hedge fund Corvex Managementdisclosed a stake of about 6% and called for a strategic review, including scrutiny of Whitbread’s multi-year capital investment plan.
Corvex argued the market is not fully valuing Whitbread’s assets (including property and its Germany exposure), and sought board representation. Whitbread shares rose sharply on the news.
Currys surges on profit growth and a confident Christmas message
On the FTSE 250, Currys rallied after reporting a strong first half and reiterating expectations for full-year profit growth, saying it was well positioned for Christmas trading.
Reuters noted Currys’ adjusted pre-tax profit more than doubled to £22 million and revenue rose 8% to £4.23 billion, with momentum across the UK & Ireland and Nordics.
By the close, Currys was one of the FTSE 250’s standout gainers.
Other notable winners and laggards
A snapshot of the leadership underscores the day’s “risk-on, cyclicals + idiosyncratic catalysts” feel:
FTSE 100 notable risers included:
- Whitbread (activist catalyst)
- Fresnillo and Glencore (helped by stronger commodity tone)
- Rentokil Initial (boosted by a broker upgrade, per market commentary)
- Rolls‑Royce (among strong industrial performers)
Notable fallers included:
- Bunzl, United Utilities, BP, and GSK among the weaker large caps in the session.
- On the FTSE 250, B&M European Value Retail was among the names in the red.
Global tailwinds: softer US inflation and the ECB staying on hold
While the Bank of England was the UK’s headline event, global macro developments mattered to London’s late-session tone.
US inflation cools to 2.7% — boosting hopes of future Fed cuts
US consumer inflation data released Thursday showed the Consumer Price Index rose 2.7% year-on-year in November, below expectations, according to Reuters.
Reuters also flagged that the reading may have been affected by data-collection disruptions linked to the US government shutdown, but the immediate market impact was clear: the softer print supported risk assets globally and helped lift Wall Street early in the session.
European Central Bank holds rates at 2% and upgrades forecasts
In Europe, the ECB held rates steady and nudged up its growth outlook—reinforcing a “higher for longer” stance compared with other central banks that are still cutting.
Reuters reported the ECB kept policy unchanged and lifted its 2025 growth forecast to 1.4%, with inflation seen hovering around target over the projection horizon.
The Financial Times similarly reported the ECB held its benchmark rate at 2% and raised its growth projections, indicating greater confidence in eurozone resilience.
For London investors, the combination of:
- UK rates edging down,
- eurozone policy staying steady,
- and US inflation surprising to the downside,
helped frame Thursday’s move as part of a broader “rates are easing (selectively) without a growth shock” narrative—at least for now. Reuters+1
UK market outlook: what forecasters and traders are saying after the BoE cut
The big question after a well-telegraphed rate cut is always: what next? Thursday’s coverage revealed a meaningful gap between market pricing and some economists’ expectations.
What markets are pricing
Earlier on Thursday, Reuters reported that markets were leaning toward a relatively shallow easing path—suggesting only one more BoE rate cut in 2026 in prevailing expectations.
Sterling’s post-decision strength and the rise in short-dated gilt yields were consistent with that “not many cuts left” interpretation. Reuters
What economists and bank strategists are forecasting
Other commentary was more dovish on the 2026 path:
- In Reuters analysis, strategists at major banks argued the BoE could still be “catching up” if inflation continues to fall, with Deutsche Bank and Barclays both pointing to scope for more cuts in 2026 as inflation slides. Reuters
- The Guardian’s live coverage referenced expectations among economists for multiple 2026 cuts—some looking for Bank Rate to move toward the low‑3% range over time, depending on growth and labour-market conditions.
What’s important for UK equities is not just the number of cuts, but how the cut cycle changes earnings expectations:
- If cuts come because inflation is falling but growth is stable, domestic cyclicals can benefit.
- If cuts accelerate because growth deteriorates, defensive positioning often wins out—even if rates are lower.
Thursday’s session leaned toward the former interpretation: cyclicals and consumer-linked names outperformed and the FTSE 100 pushed to a multi-week closing high.
What to watch next: UK data on Friday and late‑year trading dynamics
With London now closed, attention turns to the next set of catalysts that can move UK equities before year-end liquidity thins further.
UK retail sales (ONS) — Friday morning
The Office for National Statistics is scheduled to publish Retail Sales; Great Britain: November 2025 at 7:00am on Friday 19 December 2025, an important read-through for the consumer outlook going into the holiday period.
Company results: WH Smith
WH Smith is due to publish delayed full-year figures on Friday 19 December, after previously flagging accounting issues in its North America division—an update investors will likely use to reassess the company’s travel-led strategy and outlook.
Bottom line: UK stocks end higher as rate cut lands, but the tone stays cautious
As of 5:15pm GMT on 18 December 2025, the UK stock market’s verdict was constructive: the BoE cut rates, global inflation news helped sentiment, and stock-specific stories (notably Whitbread and Currys) added fuel.
But the day also underlined a late‑2025 reality: the direction of rates matters less than the pace, the vote split, and the guidance—because that is what shapes currencies, bond yields, and ultimately the winners and losers inside the FTSE indices.
