The most important sector to the UK economy, the Banking sector is a key barometer not just to consumer sentiment, but also investors’ thinking.

Just 18 months after some institutions traded seven year and even all-time lows following the UK’s vote to leave the EU, UK Banks have enjoyed a miraculous turnaround. But is this recovery set to continue? What hurdles remain for our economy’s key sector?

Central banks rule the roost

2018 has kicked off with a slew of notable central bank meetings. The European Central Bank began by giving a more hawkish than expected policy statement, with President Draghi noting a decision on extending the Bank’s quantitative easing (QE) taper would be made later in the year, while interest rates would remain unchanged for some time.

The US Federal Reserve meeting a week later was a much more reserved affair. However recent inflation prints have raised expectations that the Fed will have to hike interest rates faster than previously expected, a primary drive for increased equity market volatility.

For the domestically-focused UK Banks, however, it was the Bank of England’s monetary policy update earlier this month that has been the most influential.

Policymakers believe with global growth progressing and stubbornly high UK inflation hurting consumers, the Bank will raise interest rates sooner and by more than is currently expected. This will have a significant impact on UK banks, as explained later in the report.

To access, or not to access

Like a real-world game of hokey cokey, politicians, the media and bankers themselves have been unsure what impact Brexit will have on UK banks.

Reports that financial institutions will be allowed access to the continent after Britain leaves the EU have been followed just as swiftly by reiterations that the UK will leave the EU single and customs markets.

Currently, banks have access to the European continent through these markets, allowing UK institutions to act as a gateway to Europe for US and Asia investors, cementing their world leading titles.

Although, the impact on UK banks is yet unknown, If the UK were to lose access to the continent it may force both jobs and operations abroad as banks struggle to maintain the status quo. And with politicians yet to clearly define their position on financial institutions’ future access to the EU, this issue could loom over banks for much of 2018.

What dates do the UK Banks report?

With full year results providing a key launchpad for share price performance over the coming days, weeks and months, it’s unsurprising the four major UK high street banks all report during the same week.

HSBC kicks off proceedings, releasing FY figures on 20 February, before Lloyds follows the very next day.  Barclays releases its results on 22 February, while RBS rounds things off, reporting on Friday 23^rd.

Overleaf, we analyse the reaction to major UK banks’ third quarter results, including the performance of shares in the following days and weeks, and preview the major talking points of their full year results.