London markets muted as investors mull Bank of England’s next step

London markets were muted during the opening session this morning as investors mull whether the Bank of England will hike interest rates next month.

The capital’s FTSE 100 index inched down 0.02 per cent to 7,202.55 points during the first hour of trading.

Several banking giants yesterday raised their forecasts for when the Old Lady will hike interest rates after governor Andrew Bailey gave the strongest signal yet that the central bank is moving toward a more hawkish position.

Goldman Sachs, JPMorgan and dutch bank ING now think the Bank will raise rates in November, with markets now agreeing unanimously. Just before their September rate setting meeting, markets thought the BoE would increase borrowing costs next summer.

Long-dated UK government debt was broadly flat this morning. The pound strengthened against the greenback, up 0.48 per cent to buy $1.3791.

Travel stocks were the worst performers on the FTSE 100 this morning. British Airways owner IAG and aerospace engineer Rolls Royce came first and third in the fallers column.

The mid-cap FTSE 250 fared better than its senior rival, climbing 0.26 per cent to 23,027.94 points, led higher by price comparison site Moneysupermarket after news broke that it is buying consumer cash back firm Quidco.

European shares were mixed during the open. Germany’s Dax 30 and the pan-Europe Stoxx 600 were down 0.02 per cent and up 0.04 per cent respectively.