UK back in favour after inflation news

Chris Beauchamp IG

There has been a notable mood shift on the UK outlook following today's inflation figures, which have seen both major UK indices shoot higher, says Chris Beauchamp, Chief Market Analyst at investing and trading platform IG.

UK indices revel in weakening inflation hopes

The FTSE 100 is poised to enjoy its best day in at least two months, while the FTSE 250 is also firmly in rally mode, knocking on the door of the July high and briefly hitting levels not seen in over three years. Today’s CPI reading seems to have transformed the tenor of the debate about the UK – if inflation does ease and yields come down, the BoE will be able to think more firmly about easing while the government will find some of the excruciating pressures on its finances alleviated.

Housebuilders and banks lead the way

There is very much a domestic focus to today’s FTSE 100 gainers. Persimmon and Howdens have topped the leaderboard on hopes that homeowners might feel more tempted to splash the cash on renovations and moving home, while Barclays has joined in the general UK love-in, sounding much more upbeat about the months to come.

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Chris Beauchamp

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