UK Price Rises Persist, FTSE Fluctuates, Sterling Nears Peak 

The FTSE 100 closed 0.28% higher on Wednesday, driven by gains across multiple sectors. Oil majors, miners, utilities, and defensive stocks such as pharmaceutical companies and tobacco firms all contributed to the index’s positive performance. 

Burberry emerged as the standout performer, leading the index with a rise of over 4%. This surge was attributed to speculation surrounding recent insider buying activity, including another small director purchase reported on the day. 

In the energy sector, oil giants BP and Shell saw notable gains of 1.4% and 0.8% respectively. These increases were primarily fueled by rising oil prices in the global market. 

(FTSE 100 Index Monthly Chart) 

The Consumer Prices Index (CPI) in the UK held steady at 2% in June, aligning with the Bank of England’s (BOE) target for the second consecutive month. However, this headline figure masked underlying concerns, particularly in the services sector where inflation remained stubbornly high at 5.7%. 

These results diverged from economists’ expectations. The consensus forecast had anticipated a slight decrease in the headline rate to 1.9%. Moreover, the BOE had projected services inflation to be at 5.1%, significantly lower than the actual figure. 

The persistence of inflationary pressures in the services sector suggests that while overall inflation is currently at the target, it may not remain there for long. This development could potentially delay the BOE’s plans to cut interest rates. 

In response to these figures, financial markets adjusted their expectations. Traders reduced the probability of a rate cut on August 1st to approximately 30%, down from over 40% the day before. This shift in sentiment was reflected in the currency markets, with the British pound strengthening to $1.3, maintaining levels close to its one-year highs. 

(UK Inflation Rate YoY%， Office for National Statistics) 

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