Over the past month, the winds have begun to change. After 10 long years of accommodative monetary policy from global central banks, the rest of the world has begun to catch up with the US Federal Reserve.

UK Banks have been on the back foot since February, with a combination of continued ultra-low interest rates, Brexit uncertainty, an surprise general election and a lack of promised US policy reform all weighing.

Most notably, Barclays fell almost 25% from February’s 18-month high of 244p to its September lows, dipping below 200p a share for the first time since Donald Trump’s election. Similarly, Lloyds suffered from mid-May onwards, making a strong retracement from 12-month highs of 73.5p back to April’s 2017 lows of around 62p. The Royal Bank of Scotland fared a little better than peers for the majority of the year, however this didn’t stop its share from falling to a 5-month low earlier this month.

And the negative trend looked set to continue when the Bank of England met to discuss monetary policy earlier this month after policy makers voted 7-2 in keeping interest rates at the current record low level of 0.25%.

However, the wording of the accompanying policy statement caught the attention of financial markets. Instead of previous releases, in which the BoE suggested it was willing to tolerate inflation overshoots, this particular releases warned that markets and investors had not sufficiently priced in interest rates rising faster and by a larger amount than current expectations. The ensuing reaction was pronounced.

Sterling halted its sharp sell-off against the Euro, rallying sharply to a 2-month high against the European currency, while recovering to its best level against the US dollar since the EU referendum last June.

But it was just as important for UK Banks, particularly those with large mortgage books and deposit rates.

The Royal Bank of Scotland has rallied over 10% in the space of a fortnight, while Lloyds, the holder of the largest UK mortgage book, has traded as much as 6% higher than its lows on the day of the BoE meeting.

UBS is currently expecting the British central bank to hike interest rates twice in the coming 9 months, the first in November and the second in May 2018. Should they indeed follow UBS’s forecasts, could the UK Banks benefit from improved margins over the coming 12 months?

Barclays, while note enjoying the same boost form the BoE as its peers, has also got reasons to be positive. The US President Donald Trump has revealed the framework for his crucial tax reform, a plan that looks to increase US economic growth by around 1%. Barclays, with the largest US presence of any of the UK banks, could therefore benefit should it be approved by Congress.

But having failed to deliver on his promise to repeal Obamacare, will Trump struggle to pass his most important economic test of his presidency so far? The news is likely to come in thick and fast over the coming weeks, with UK markets reacting to every latest twist and turn in the US overnight.

Does your current news source provide you a clear, concise round up of overnight events and its impact on the markets, before the London Stock Exchange opens?

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Joe Nguyen, Trader, 29 September