UK Equity Market Rebounds on Rate-Cut Optimism as Sterling Strengthens

The FTSE 100 delivered a robust performance on Monday, bouncing back from Friday’s weakness amid growing speculation that the Bank of England may lower interest rates. The London Stock Exchange’s main index swung between 9,687.70 and 9,751.20, ultimately closing near the session highs at 9,745.20—representing a 1 percent gain from Friday’s 9,649.03 close. With 90 out of 100 stocks trading in green, the underlying tone remained decisively bullish.

Stock Market Highlights

Gainers dominated the session, led by mining firm Antofagasta, which surged 3.4 percent. The airline and car retail sectors also showed strength, with International Consolidated Airlines Group and Auto Trader Group each posting advances exceeding 3 percent. On the flip side, pharma counterpart Hikma Pharmaceuticals registered the steepest decline at 1.1 percent, as only a handful of names struggled against the broader uptrend.

Currency Markets Shift in Favor of Sterling

The weakening US dollar provided tailwinds for sterling. The six-currency Dollar Index retreated 0.11 percent to 98.29, down from the prior close of 98.40. Sterling capitalized on this backdrop, with GBP/USD climbing 0.09 percent to 1.3384, trading within a range of $1.3396 to $1.3355. The EUR/GBP pair edged lower by 0.05 as a percent to 0.8776, signaling pound strength against the common currency. Meanwhile, GBP/JPY declined 0.34 percent to 207.67.

Bond Market Softens Across Maturities

Reflecting easing rate expectations, UK gilt yields contracted across the curve. Ten-year bond yields dropped 0.33 percent to 4.5030 percent, having traded within a 4.4860 percent to 4.5090 percent band during the session, compared to 4.5180 percent the previous day. The across-the-board decline in borrowing costs reinforced the risk-on sentiment that underpinned equities.

This analysis is provided for informational purposes only and reflects market movements as of the trading session described.