FTSE 100 Hits Record Close as Investors Eye Bank of England Moves and Corporate Earnings

The UK’s FTSE 100 index ended at a new record high on Tuesday, lifted by optimism over corporate earnings and expectations that the Bank of England may soon begin easing monetary policy. The milestone underscores renewed confidence in Britain’s equity markets, which have spent much of the year playing catch-up with global peers.

The blue-chip index rose 0.7 percent to close at 8,360 points, surpassing its previous record from earlier this spring. Gains were driven largely by strong performances from energy, mining, and banking stocks, with oil prices stabilising and investors rotating back into cyclical sectors.

Traders said sentiment improved as inflation pressures showed further signs of cooling, raising hopes that the Bank of England could cut interest rates early next year. “The market is starting to believe the worst of the rate hike pain is behind us,” said Hannah Patel, a senior strategist at Lombard Markets. “We’re seeing a gentle return of risk appetite, especially in sectors that benefit from lower borrowing costs.”

The Bank of England is expected to keep interest rates steady at its next meeting, but investors will be watching closely for any shift in tone from Governor Andrew Bailey and his team. Analysts say policymakers are balancing a fragile recovery with lingering inflation risks, particularly in the services sector.

The FTSE’s latest surge also coincided with a wave of upbeat corporate updates. Major banks reported resilient earnings, while several consumer and industrial firms surprised analysts with stronger-than-expected quarterly results. “Earnings have not been spectacular, but they’ve been steady, and that stability is exactly what investors wanted to see,” said Jonathan Mills, equity analyst at City Capital Advisors.

Global trends also played a role. Wall Street’s continued rally and a rebound in European equities encouraged broader inflows into UK-listed companies, which many global investors now view as undervalued relative to US and European counterparts. The weaker pound, which slipped slightly against the dollar this week, provided an additional boost to exporters and multinational firms listed in London.

However, analysts warned that the rally could be tested in the coming weeks as more companies report earnings and the economic picture remains mixed. “It’s encouraging to see a record close, but sentiment can turn quickly,” Mills added. “Much depends on whether the Bank of England signals confidence in the economy or maintains a cautious stance.”

For now, traders say the tone remains positive. The combination of easing inflation, strong commodity prices, and improving earnings momentum has given investors reasons to stay optimistic. Still, many are wary that geopolitical risks, sluggish consumer spending, and uneven growth could temper gains later in the year.

“The FTSE hitting a record is a morale boost for the City,” Patel said. “But the next few months will show whether this is a sustainable rally or just a relief bounce after two tough years for UK equities.”