The FTSE 100 index traded largely flat ahead of the Bank of England’s highly anticipated interest rate decision, reflecting a cautious mood among investors.
With the central bank expected to announce a 0.25% rate cut, market participants are holding steady, waiting for clarity on the direction of UK monetary policy amid ongoing global tariff tensions and economic uncertainty.
The subdued movement in the FTSE 100 comes as attention also turns to the possibility of a major U.S.-U.K. trade deal, which could be announced later today. Hints from U.S. officials and media reports have fueled speculation that the agreement will focus on reducing tariffs and strengthening economic ties between the two countries.
Such a deal, if confirmed, could provide a boost to British exporters and help offset some of the headwinds facing the UK economy.
Elsewhere in Europe, major indices including Germany’s DAX and France’s CAC 40 posted modest gains, supported by investor optimism over potential easing of trade tensions and the prospect of central bank support.
Currency markets reflected the cautious sentiment, with the British pound slipping against the U.S. dollar as traders braced for a dovish tone from the Bank of England. Analysts suggest that any surprise in the BoE’s guidance or the scale of the rate cut could trigger further market volatility.
As the trading day progresses, all eyes remain on the Bank of England’s policy announcement and the potential unveiling of the U.S.-U.K. trade deal, both of which are poised to shape the direction of the FTSE 100 and broader market sentiment in the near term.