Prospects for UK banks have not been affected by the surprise decision of the Bank of England not to raise interest rates, according to analysts at Barclays.

“The status-quo MPC comes as little surprise and may have helped quell overly bullish rate expectations.

“With rate hikes a matter of time, we continue to see UK banks as well-positioned to benefit from rising rates, boosted by low deposit betas and improving activity.”

Having been anticipating an interest rate hike yesterday, markets are now pricing in a first BoE hike in February, bringing a potential three-month delay to the tightening schedule.

Barclays likes the sector overall but in particular, Lloyds Banking and NatWest Group, which are the most geared to the UK economy.

Shares in Lloyds rose 1.9% to 49.2p and NatWest by 1.7% to 215.9p.

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