In its August meeting, the Bank of England reduced its Bank Rate by 25 basis points to 5%, aligning with the expectations of a narrow majority of market participants. The cut lowered the benchmark rate from its 16-year high, where it had remained for a full year. The Monetary Policy Committee (MPC) described the decision as “finely balanced,” with four out of nine members opting to maintain current borrowing costs. 

The Committee noted that it anticipates headline inflation to decrease and inflation expectations to converge toward the target. Following the rate decision, market participants have escalated their expectations for further rate reductions in the remaining months of the year, anticipating an additional 35 basis points of cuts. However, Governor Bailey cautioned against reducing rates “too quickly or by too much”. His warning stems from ongoing concerns regarding the persistent nature of domestic inflationary pressures. 

(United Kingdom Historical Interest Rates) 

The FTSE 100 closed down 1.01% at 8,283 on Thursday, reversing its earlier gains. The index was heavily influenced by a mix of positive and negative corporate news, with losses ultimately outweighing gains. Meanwhile, GBPUSD dropped below $1.28, reaching a low not observed in approximately a month. 

On the positive side, Next surged 8.3% after raising guidance on strong quarterly results. Similarly, Rolls-Royce climbed 7%, also due to raised guidance and strong quarterly performance. The engine maker additionally pledged to reinstate dividends next year. 

However, these gains were overshadowed by significant losses in several sectors. Melrose shares plummeted over 12%, bottoming at the index. Despite reporting results above expectations, the company lowered its revenue guidance to £3.8 billion. Schroders also disappointed investors, dropping 9.7% due to underwhelming results. 

The banking and financial sector faced broad declines, contributing significantly to the index’s overall loss. NatWest fell 8.1%, while HSBC decreased 6.5%. Standard Chartered declined 6%, Lloyds was down 5.7%, Barclays dropped 4.7%, and Prudential decreased 4.5%. 

(FTSE 100 Index Weekly Chart) 

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Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided. 

Willy

Willly is a skilled and experienced market analyst who has been analyzing financial markets for over 5 years. He currently serves as a Market Analyst at Ultima Markets, a leading financial services company. Willy brings a wealth of expertise in fundamental and technical analysis, having previously worked as Head of Financial Market Analyst at GCMAsia. There, he oversaw the research department and developed educational materials to build clients' financial knowledge. He also collaborated cross-functionally to amplify sales and achieve business goals. Prior to that role, Willy gained valuable experience as a Financial Market Analyst at the same company. He generated daily and weekly reports, conducted market briefings, and provided trading strategies through webinars. Read his latest market analyses on the Ultima Markets News & Analysis.

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