UK stocks fall ahead of Bank of England interest rate decision

Thursday 18 - 10:14

British stock markets declined on Thursday as investors adopted a cautious stance ahead of the Bank of England’s upcoming interest rate decision, while also reacting to global monetary policy signals and corporate earnings updates.

The benchmark FTSE 100 index fell by around 0.9%, while the FTSE 250 mid-cap index also recorded losses. Market sentiment was largely driven by uncertainty over the central bank’s next move, with the Bank of England widely expected to keep interest rates unchanged at 3.75%.

Investor caution was reinforced by recent signals from the U.S. Federal Reserve, which held its own rates steady but maintained a relatively hawkish outlook, with several policymakers still considering future rate increases due to persistent inflation concerns.

Financial stocks were among the main drag on the UK market, alongside materials and other rate-sensitive sectors. Shares in major financial institutions came under pressure, reflecting broader concerns about interest rate direction and economic stability.

In corporate news, the UK’s largest supermarket chain Tesco saw its shares fall after reporting slower underlying sales growth in its first quarter, disappointing market expectations. The decline added further pressure to an already cautious retail sector outlook.

Conversely, some companies performed strongly. Testing and certification group Intertek gained after agreeing to a takeover deal with private equity firm EQT, while Informa, a major exhibitions and events company, rose following an improved growth forecast for 2027.

Oil majors also weakened, with BP and Shell declining as crude prices fell to their lowest levels since earlier geopolitical disruptions in the Middle East.

Analysts say investors are closely watching central bank signals as inflation trends, interest rate expectations, and global economic uncertainty continue to shape short-term market direction in the UK.

Overall, the session reflected a market balancing corporate news, global monetary policy developments, and expectations for the Bank of England’s next policy decision.