The FTSE 100 edged higher on Thursday as market participants positioned themselves ahead of a pivotal Bank of England (BoE) interest rate decision and the anticipated announcement of a major U.S.-U.K. trade agreement. Early in the session, the FTSE 100 rose by 0.25%, reflecting cautious optimism across the London market.
Bank of England Poised for Rate Cut
All eyes are on the BoE, which is widely expected to announce a 0.25 percentage point cut to bring the UK’s base interest rate down to 4.25%. This move comes amid growing concerns over the economic impact of ongoing global tariff tensions, particularly those stemming from recent U.S. trade policies.
The central bank’s decision is seen as a response to slowing economic growth, persistent cost pressures, and heightened uncertainty. Economists expect the BoE to signal the possibility of further rate reductions later this year, as policymakers evaluate the evolving trade landscape and its implications for inflation and employment.
U.S.-U.K. Trade Deal in Focus
Adding to the day’s significance, expectations are high for an official announcement on a new U.S.-U.K. trade deal. Reports suggest that President Trump is set to unveil the agreement, which is likely to focus on reducing tariffs and strengthening economic ties between the two countries.
The prospect of a trade pact has buoyed investor sentiment, as it could provide a much-needed boost to British exporters and help offset some of the headwinds facing the UK economy.
Currency and Market Moves
The British pound slipped more than 1% against the U.S. dollar, trading around 1.32, as traders anticipated the BoE’s dovish stance. European markets also posted gains, with Germany’s DAX and France’s CAC 40 both moving higher in early trading.
Corporate Highlights
- Next PLC reported first-quarter sales well above expectations, driven by strong demand for summer clothing, and raised its profit outlook for the year.
- InterContinental Hotels Group (IHG) confirmed it is on track to meet its full-year profit targets, supported by a 3.3% increase in global revenue per available room.
- UK house prices posted a surprise gain in April, rising 0.3% after a decline in March, signaling resilience in the housing market despite broader economic uncertainty.
With the BoE’s rate decision and the potential U.S.-U.K. trade deal announcement on the horizon, the FTSE 100 is set for continued volatility.
Investors will be closely watching for further signals from policymakers and trade negotiators, as these developments are likely to shape market direction and sentiment in the weeks ahead.