The FTSE 100 index traded 23 points lower on Wednesday in anticipation of an expected rate hike from the Bank of England (BoE) on Thursday. The British equity index closed at 7,741.33 after losing 0.29% during the day.
With the early inflation rate still in the double digits in the UK, it is anticipated that the BoE will increase interest rates by 25 basis points to 4.5%, which is the highest it has been since 2008.
The FTSE 250 index mirrored the same pattern and ended in the red zone at 19,273.3 points after a decline of 0.02%.
Overall, the European markets and FTSE 100 surrendered their previous gains after the recently released U.S. inflation figures. The data revealed that U.S. consumer prices rose at a slower pace than what was anticipated for April, indicating that the Federal Reserve’s efforts to combat inflation have been successful.
In April, the U.S. Consumer Price Index (CPI) recorded an inflation rate of 4.9%, which was lower than analysts’ estimates of 5%.
As a result, the pound soared against the U.S. dollar this afternoon to its peak for the year, as there might be a pause to the interest rate hikes after a lower inflation rate.
The stronger pound impacted the stock of the companies that generate the majority of their revenues in the U.S. Unilever PLC (GB:ULVR) traded down by 1.46%, and the liquor giant Diageo PLC (GB:DGE) fell by 1.36% yesterday.
On the company front, another piece of news came in from Uber Technologies Inc. (NYSE:UBER) (GB:0A1U), which introduced flight bookings to its app in the UK. With this move, the company is targeting a “super app”, which will enable customers to book a seamless journey across various modes of transportation.
Among the losers, British retailer ASOS PLC (GB:ASC) lost 23.3% in a day after the company reported a pre-tax loss of £290.9 million in its first-half earnings. This was its largest drop in over 10 months, resulting in a significant impact on the FTSE mid-cap index.
The company’s numbers were hit as more and more shoppers held on to tight budgets amid a challenging environment. The company’s sales were down by 7% to £1.84 billion.
On the winning side, Melrose Industries PLC (GB:MRO) gained more than 4.5% and traded at the top of the FTSE 100 index. The manufacturing company announced that its full-year numbers remain in line with expectations.