London’s leading share index headed for its strongest day in about six weeks on Wednesday, lifted by a sharp rally in bank shares and a jump in precious-metal miners as investors looked ahead to the Bank of England’s rate decision.
The FTSE 100 rose 1.18% to 10,764.49 points by 1121 GMT, while the midcap FTSE 250 climbed 0.83% to a two-month high, according to Reuters market reporting.
Banks provided the biggest lift to the blue-chip index, rising 4.3% as a group and heading for their largest one-day gain in nearly six months. HSBC, Standard Chartered, NatWest, Lloyds and Barclays each gained between 3.6% and 4.8%.
Analysts linked the move to expectations that the Bank’s Monetary Policy Committee will raise rates by 25 basis points on Thursday, a step that would tend to widen banks’ lending margins. Fiona Cincotta, senior markets analyst at City Index, noted that banks had lagged badly this year and that a rate rise would be supportive for their net interest income.
Precious-metal miners rose nearly 6.2%, set for their biggest one-day gain in almost three months, tracking a roughly 3% rise in the gold price. The dollar slipped after the Democrats’ sweep of the US midterm elections, which raised concerns about tighter regulation of artificial intelligence and its potential drag on growth.
Among individual movers, Lion Finance Group rose 7.5% after announcing a share buyback, while engineering firm Weir fell 7.7% after flagging shorter-term headwinds from Middle East conflict and disruption at Chilean mines, despite keeping its annual outlook unchanged. Metro Bank jumped 13.9% to lead the midcap index after reaffirming its targets, including a return on tangible equity of more than 13% in 2026.
Sterling also strengthened, rising 0.63% against the dollar to $1.3495 by 1022 GMT, its highest level since 15 September, and holding a touch firmer against the euro at 83.43 pence. The pound has been in sharper focus since Finance Minister John Healey’s budget, which set out cautious tax and spending plans aimed at households hit by what he called global economic storms.
Traders are pricing in a rate increase on Thursday, according to money-market data, and the move would be the Bank’s first rate rise since August 2023. UK inflation, already at 3.5%, is heading materially higher, while the economy has outperformed expectations and the labour market appears to have stabilised, economists say.
Some analysts cautioned, however, that much of the optimism may already be reflected in prices. Goldman Sachs analysts wrote that Bank of England hike pricing looked stretched relative to other major economies and that sterling’s valuation remained a challenge. Bank of America Global Research analysts said a so-called dovish hike — a rise accompanied by cautious guidance — would be a headwind for the pound but was unlikely to do lasting damage while fundamentals improved. Some economists polled by Reuters also expect the Bank to temper market bets on three to four further increases in 2027.
Sources: Reuters, “FTSE 100 climbs 1% on banks, miners boost” and “British pound hits seven-week high against wilting dollar”
