UK stocks edged higher on Monday, starting the week on a positive note, with markets having almost fully priced in an interest rate cut by the Bank of England later this week.
The UK’s blue-chip FTSE 100 jumped 0.9% by 10:26 GMT, while the midcap FTSE 250 index added 0.66%. Both indexes ended lower for a second consecutive week of declines on Friday.
According to a poll, analysts expect a narrow 5-4 vote to lower the benchmark rate 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.
Analysts see Bailey’s vote as crucial, with easing inflation strengthening the case for a cut. While rate expectations dominated sentiment, gains in precious metals added further support to the market.
An index of personal goods , dominated by luxury names, led with a 2.3% jump, after China announced plans to expand exports and imports next year as part of efforts to promote what it called “sustainable” trade. Burberry rose 2.6% and Watches of Switzerland Group added 2.3%.
