Finance
London stocks climb as BoE rate cut looms
Published by Global Banking & Finance Review®
Posted on December 15, 2025
2 min readLast updated: January 20, 2026
Quick Summary
UK stocks rise as the BoE is expected to cut rates. FTSE 100 gains 1.1%, with financial stocks leading. Inflation eases, but jobless rate may increase.
London Stocks Surge as Bank of England Rate Cut Approaches
Dec 15 (Reuters) - UK stocks closed higher on Monday, starting the week on a positive note ahead of a widely expected interest rate cut by the Bank of England later this week.
The UK's blue-chip FTSE 100 closed up at 1.1%, while the midcap FTSE 250 index added 0.7%. Both indexes ended lower for a second consecutive week on Friday.
On Thursday, traders widely expect the BoE to lower rates to 3.75% from 4.0%, marking the first reduction since August and bringing borrowing costs to a three-year low.
Governor Andrew Bailey's stance is seen as pivotal after recent data showed inflation easing to 3.6% in October, with further declines expected.
Wall Street's main indexes turned lower in afternoon trading as risk-off mood from last week returned ahead of the release of a string of delayed U.S. economic data and a slew of decisions from central banks.
Among sectors, the life insurance index led with 2.5% gain.
Prudential was up 3.2% after its joint venture with India's ICICI bank, ICICI Prudential Asset Management's $1.2 billion initial public offering was fully subscribed on the second day of bidding.
Heavyweight banks stocks firmed 1.7%.
The upbeat tone in financial stocks contrasts with looming labour market concerns, as investors brace for UK jobs data and shifting rate expectations across Europe.
The UK jobless rate is expected to rise to a 5-year high of 5.1% in October, while UK interest rates are forecast to drop.
The ECB is likely to hold rates steady with a rising chance of a hike next year.
The FTSE 100 is on pace for its best year since 2009, rising 19.3% year-to-date, outpacing the S&P 500’s 16% climb, as precious miners and financial shares have driven gains on the exchange.
Among other stocks, TT Electronics slumped 17% after the DBAY Advisors, the biggest shareholder of TT Electronicssaid that it does not intend to make an offer for the British company, withdrawing from a possible bidding war with Swiss firm Cicor .
(Reporting by Tharuniyaa Lakshmi in Bengaluru; Editing by Tasim Zahid)
Key Takeaways
- •UK stocks rise with FTSE 100 up 1.1%.
- •BoE expected to cut interest rates to 3.75%.
- •Inflation eases to 3.6% in October.
- •Prudential gains from ICICI joint venture IPO.
- •UK jobless rate may hit 5.1%.
Frequently Asked Questions about London stocks climb as BoE rate cut looms
1What is an interest rate?
An interest rate is the amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal amount. It can influence economic activity and borrowing costs.
2What is the Bank of England?
The Bank of England is the central bank of the United Kingdom, responsible for issuing currency, maintaining monetary stability, and overseeing the financial system.
3What is inflation?
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI).
4What is the FTSE 100?
The FTSE 100 is a stock market index that represents the 100 largest companies listed on the London Stock Exchange, serving as a key indicator of the UK stock market's performance.
5What is a blue-chip stock?
A blue-chip stock refers to shares of well-established companies with a history of stable earnings, reliability, and strong performance in the stock market.
