The FTSE 100 rose 135 points to 10,721 on Wednesday, reaching a four-month high of 10,733, after UK inflation eased to 2.6% from 2.8% in June. The softer reading reduces pressure on the Bank of England to tighten further, supporting demand for UK equities.
The FTSE 100 rose 135 points to 10,721 on Wednesday, reaching a four-month high of 10,733, after UK inflation eased to 2.6% from 2.8% in June.
The headline consumer price index rose 2.6% in the 12 months through July, down from 2.8% in June, according to the Office for National Statistics. Core CPI, which strips out volatile food and energy prices, held steady, indicating underlying price pressures remain persistent even as the headline rate moderates.
The reading marks the second consecutive monthly decline after inflation held at 2.8% in both May and June. The softer print reduces the urgency for the Bank of England to tighten policy further, supporting demand for UK equities by lowering the discount rate applied to future corporate earnings.
Energy stocks contributed to the advance as Brent crude oil extended gains amid ongoing Middle East tensions. Mining shares also added to the rally, supported by firmer commodity prices. The pound edged lower against the dollar after the data release, with GBP/USD slipping, according to market data. A weaker sterling typically benefits the export-heavy FTSE 100, whose constituents generate a significant portion of their revenue overseas.
The advance pushed the FTSE 100 past recent resistance levels, with the index now up year to date after recovering from a pullback earlier in the year when sticky inflation and geopolitical uncertainty weighed on investor confidence. Traders will now focus on the Bank of England's next policy meeting for signals on the rate path.
This article is for informational purposes only and does not constitute investment advice.
