UK stocks opened lower following unexpectedly strong inflation figures, which reduced expectations for an August interest rate cut by the Bank of England.
The FTSE 100 index, composed of blue-chip stocks, was down by 0.2%, marking its third consecutive session of losses. Meanwhile, the mid-cap FTSE 250 index also declined by 0.3%.
The consumer prices index indicated that inflation remained at 2%, contrary to predictions of a slight decrease. This outcome added uncertainty regarding the timing of potential monetary easing by the central bank.
The probability of a rate cut in August fell to as low as 25%, down from 49% before the data release, and currently stands around 36%.
Yields on two-year government bonds saw a modest increase, while the pound strengthened against the dollar, contributing to subdued market sentiment.
Among sectors, industrial metals miners experienced the largest declines, dropping by as much as 1.5% in line with lower prices for most base metals.
Shares of Babcock initially fell by 4.4% following the British engineering company’s failure to meet operating profit expectations, although they have since recovered.
