The UK's blue-chip FTSE 100 index posted strong gains on Monday, 15 December 2025, as investors positioned themselves ahead of a pivotal week of central bank decisions and key economic data.
Markets Rally Ahead of BoE Decision
The FTSE 100 index closed up 102.28 points, or 1.1%, at 9,751.31. The domestically-focused FTSE 250 also advanced, gaining 172.61 points (0.8%) to finish at 22,049.16. In contrast, the AIM All-Share index dipped slightly, closing down 0.3% at 749.23.
European markets mirrored the positive sentiment. The Cac 40 in Paris rose 0.7%, while Frankfurt's Dax 40 edged up 0.2%.
This week's financial calendar is packed with events likely to sway markets. The Bank of England, European Central Bank, and Bank of Japan are all set to announce monetary policy decisions. Furthermore, crucial inflation and retail sales figures are due from both the UK and the US, with the influential US non-farm payrolls report for October and November landing on Tuesday.
Analysts Point to Reduced Policy Uncertainty
Market commentators noted a surprisingly optimistic tone among traders despite the heavy data schedule. Joshua Mahony, an analyst at Scope Markets, attributed this to shifting expectations following the US Federal Reserve's recent rate cut.
"With the Fed's rate cut meaning that the jobs report and inflation data will have less of an immediate impact on monetary policy," Mahony stated. He added that high confidence in anticipated moves from the Bank of England and Bank of Japan "does alleviate much of the risk that we see any major unexpected hurdles for traders to navigate."
All eyes are on Threadneedle Street, where the Bank of England's Monetary Policy Committee (MPC) meets on Thursday. Tom Stevenson of Fidelity International noted that swaps markets are pricing in a 90% chance of a quarter-point cut, which would lower the Bank Rate to 3.75%. This would mark the sixth reduction since the cutting cycle began in the summer of 2024.
However, Stevenson cautioned that the decision remains finely balanced. "It is possible that Bank governor Andrew Bailey will be forced to use his casting vote this week," he said. The debate centres on whether rates have neared the 'neutral' level, splitting the MPC between those advocating further cuts to boost growth and others urging caution until inflation is definitively subdued.
Stock Movers and Corporate News
Financial stocks led the FTSE 100's advance. Prudential surged 3.2%, Hiscox gained 3.0%, Barclays rose 2.2%, and NatWest climbed 3.0%.
Consumer health giant Haleon was a standout performer, jumping 2.9% after Morgan Stanley named it a 'top pick' in its sector, forecasting an acceleration in organic sales growth for 2026.
Marks & Spencer shares increased 2.0% after Jefferies labelled it their favoured UK retailer, maintaining a solitary 'buy' rating in a sector where the broker is otherwise cautious. Reflecting this wariness, Jefferies downgraded Tesco, Next, and Associated British Foods.
On the downside, defence contractor BAE Systems slipped 0.4% amid diplomatic hopes for progress in Ukraine. Over the weekend, President Volodymyr Zelensky indicated a potential compromise on NATO membership in exchange for security guarantees.
A dramatic fall occurred at TT Electronics, which plunged 20%. Its largest shareholder, DBAY Advisors, ruled out making a rival bid and vowed to vote against a proposed £287 million takeover by Switzerland's Cicor Technologies, calling the offer "unattractive."
On the FTSE 250, retail group Frasers soared 7.9% after announcing a new share buyback programme of up to £70 million, a move Bank of America described as an "early festive gift" for shareholders.
Global Context and Currency Movements
At the London close, US stock indices were little changed, with the Dow Jones and Nasdaq Composite both down 0.1%. The yield on the benchmark US 10-year Treasury note softened slightly to 4.17%.
Morgan Stanley suggested this week's US jobs data could be more critical for equity markets than last week's Fed meeting, noting that markets have re-entered a 'bad news is good news' regime where moderate labour market weakness could be viewed bullishly.
In currency markets, the pound strengthened against the dollar, quoted at $1.3390 compared to $1.3356 on Friday. In commodities, Brent crude oil dipped to $60.39 a barrel.
The economic spotlight now turns to Tuesday, which brings a deluge of data including UK jobs and earnings figures, US non-farm payrolls, and US retail sales.
