UK Interest Rates: What’s Next? Market Outlook and Top FTSE 100 Opportunities

The Bank of England has recently kept interest rates steady at 5.25%, but markets are buzzing with speculation of a potential rate cut by the end of 2025. For investors and traders alike, these macroeconomic movements present both challenges and opportunities—especially across the FTSE 100.

At Quantina.co.uk, we track central bank policies, technical setups, and sentiment data to generate weekly market signals for retail traders and long-term investors alike.

How Interest Rates Affect the UK Stock Market

Interest rate decisions have a direct impact on borrowing costs, business profits, and ultimately share prices. As Quantina’s AI-driven trading models suggest, historically, a dovish shift by the Bank of England has led to upward momentum in:

• Financial sector stocks (Barclays, Lloyds, NatWest)
• Real estate and REITs (Land Securities, British Land)
• High-dividend defensive stocks (Unilever, British American Tobacco)

Quantina AI: Detecting Underpriced FTSE 100 Stocks

Our proprietary Quantina Signal™ scans the FTSE 100 weekly to uncover undervalued stocks based on a blend of RSI, MACD, P/E ratio and insider trading activity. This week’s highlighted picks include:

• Legal & General Group (LGEN): Trading at a forward P/E of just 6.4 with a dividend yield above 8%
• BT Group (BT.A): RSI approaching oversold territory, with long-term MACD divergence suggesting a rebound
• Persimmon (PSN): As mortgage rates ease, homebuilders may rally again

What Should You Buy Now?

Based on our momentum and valuation models, here are this week’s Quantina-style Buy and Sell recommendations:

• Buy: LGEN and BT.A for dividend income and technical rebound
• Buy: HSBC ahead of earnings, especially if GBP weakens further
• Hold: BP and Glencore as energy and commodities remain volatile
• Sell: JD Sports and Ocado if consumer demand remains weak

Should You Sell GBP to USD?

With the Federal Reserve taking a more hawkish stance than the Bank of England, the GBP/USD exchange rate may continue to face downward pressure. As of today, GBP/USD is hovering around 1.26.

Quantina FX Outlook:

• Short-Term: Weak GBP expected until BoE signals a rate hike or inflation data improves
• Recommendation: Consider hedging GBP exposure if you hold USD-denominated assets or income
• Technical Zone: A break below 1.2550 could signal further weakness toward 1.24

Key Dates Ahead

• Bank of England Policy Announcement: 1st August 2025
• FTSE 100 Earnings Season: HSBC, BP, Glencore in mid-July
• US Inflation Data: 12th July

Trading Strategy Tip

Quantina analysts recommend pairing high-yield FTSE 100 stocks with protective puts to hedge against summer volatility. Use Quantina Academy to learn more about options strategies, or set MACD crossover alerts for watchlist stocks.

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Disclaimer: This article is for educational purposes only and does not constitute financial advice. Investing in the stock market and foreign exchange carries risk. Past performance is not indicative of future results.