Two of the biggest UK banks will feel the benefit from the Bank of England finally raising interest rates in November but shares in RBS and Lloyds are yet to price in the resultant increase in future earnings, Jefferies argued to lift the whole sector today.

The central bank’s surprise hawkish turn earlier this month will boost RBS’s pre-tax profit by an average of 10pc between 2017-2020, the broker estimates, and crucially reduce its reliance on its NatWest Capital Markets division while Lloyds will see an average 4pc increase, the broker forecast.

The improved profitability from a hike has not been priced into the two banks’ shares, Jefferies told clients to push RBS up 9p to 270.8p and Lloyds 2.2p higher at 67.2p.

The banking sector also enjoyed a delayed boost from US Federal Reserve chair Janet Yellen teasing markets on Monday evening by cranking up her hawkish rhetoric on monetary policy, warning that the central bank must not move too gradually on raising interest rates.

It would be “imprudent” of the Fed to hold off on hiking plans due to sluggish inflation, she cautioned, adding that the Federal Open Market Committee had “misjudged” the strength of the labour market and the “fundamental forces driving inflation”.