The UK’s FTSE 100 rose on Wednesday as the pound eased following data showing the UK economy contracted in October, while markets await the Federal Reserve’s rate decision later in the day.
The blue-chip FTSE 100 index gained 0.4% by 0901 GMT, with major dollar earners like AstraZeneca up over 1%.
The more domestically-focussed FTSE 250 mid-cap index also rose 0.4%.
Bucking the trend, heavyweight energy stocks dipped 0.4% amid declining crude oil prices.
The pound eased 0.3% after official data showed Britain’s economy shrank in October, raising the risk of a recession and testing the Bank of England’s (BoE) resolve against signalling cuts to interest rates.
“This October print is probably in line with the Bank’s soggy forecast, and hence adds to a growing dovish narrative,” said Elizabeth Martins, senior economist at HSBC.
“If the BoE’s hawks wanted to push back on market expectations of rate cuts starting mid-next year, the data are giving them very little work with.”
The BoE, along with the European Central Bank, will be releasing their rate decisions on Thursday.
Both are expected to hold rates steady.
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Separately, Goldman Sachs lowered Britain’s 2023 economic growth rate forecast to 0.5%, from its previous outlook of 0.6%.
Later in the day, the Fed will announce its monetary policy decision, with the consensus tilted towards the central bank holding rates steady.
Among individual stocks, Entain jumped 3.8% after the betting firm said its CEO Jette Nygaard-Andersen would step down from the group with immediate effect.
B&M European Value Retail dropped 6.2% after SSA Investments sold about 2.8% issued ordinary share capital in the discount retailer by placing of shares at a discount of nearly 3%.
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