The FTSE 100 index advanced amid stronger sterling as markets braced for the Bank of England's monetary policy decision. Traders awaited clues on future interest rate paths, with the pound holding gains against the dollar. European equities showed mixed performance, while US futures pointed to a flat open.

Focus remained on inflation data and the central bank's forward guidance. The FTSE 100's movement reflected broader risk-on sentiment, though gains were capped by ongoing sector rotation. Analysts noted that a hawkish or dovish shift from the BOE could trigger immediate volatility in both currency and equity markets.

The index's performance this week will likely set the tone for risk appetite in the coming months.