The FTSE 100 rose +1.2% overnight spurred higher by a softer-than-expected UK inflation print. June CPI eased to 2.6% YoY, below both May’s 2.8% reading and the 2.7% consensus forecast, helped by lower fuel prices following the temporary reopening of the Strait of Hormuz. The data reinforced expectations the Bank of England will leave rates unchanged next week, although markets continue to price around a 60% chance of a September hike – the renewed fighting could undo this encouraging news if it’s not sorted sooner rather than later.
The positive inflation surprise was partly offset by rising oil prices and concerns over incoming Prime Minister Andy Burnham’s expansionary fiscal agenda, which weighed on Gilts – he looks set to be a free-spending PM with little thought to where the monies coming from.
- We’re looking for the next leg higher for the FTSE to make new highs in 2026, a great read-through for the highly-correlated ASX.
