The FTSE 100 index drifted lower on Wednesday as traders digested the latest UK inflation numbers and awaited the Bank of England’s interest rate decision. The benchmark fell 0.14% to 10,479.77, while the domestically focused FTSE 250 declined 0.4%. Consumer staples, utilities, and energy stocks exerted the most pressure.
Official data showed Britain’s Consumer Prices Index rose 2.8% year-on-year in May, unchanged from April and below the 3.0% consensus. Monthly CPIH growth held at 0.2%. The softer print prompted markets to scale back expectations of a rate increase later this year. Bond yields fell, with the five-year gilt yield hitting its lowest since mid-April, and sterling dipped to 1.3300 against a strengthening dollar.
Meanwhile, UK house prices recorded their strongest annual gain in over a year, rising 3.8% in the year to April 2026, which lifted homebuilder stocks. Banking shares also found support: Barclays rose 2% after BofA upgraded its price target, and Standard Chartered added 1.3%.
The BoE is widely expected to keep rates at 3.75%, mirroring the Federal Reserve’s recent hold. Markets are split on whether further tightening is needed, with Polymarket assigning a 100% probability to no change at the upcoming meeting but a 59% chance of a hike later in the year. From a technical standpoint, the FTSE 100 has formed a small inverted head-and-shoulders pattern above its 50-day moving average, with the RSI above 50, suggesting a potential move toward the year’s high of 10,945.
