British stocks moved cautiously higher on Wednesday as investors positioned themselves ahead of closely watched U.S. consumer price index data due later in the session.
The FTSE 100 was up 0.06% as of 03:26 ET, with broader European markets also advancing, as Germany’s DAX gained 0.26% and France’s CAC 40 added 0.45%.
Sterling edged up 0.10% to $1.3263 against the dollar, reflecting a modest improvement in sentiment around the British economic outlook.
Bank of England chief economist Huw Pill told an IMF conference in Bangkok that he was “sceptical” that four quarter-point rate hikes, as currently priced by markets, would actually be necessary.
Pill, who has voted in favour of hikes at the last four consecutive meetings, said improving data would ultimately determine the outcome of future policy decisions.
He also noted that underlying inflation had probably never returned to the 2% target before an Iran war-triggered energy shock pushed prices higher again, adding that an early policy move would have demonstrated the BoE was not “holding and hoping.”
BoE Governor Andrew Bailey, speaking in a CNN interview aired on Tuesday, said the pass-through from the energy shock had been “more subdued” in Britain so far, “but the longer this goes on, the harder it gets.”
Jefferies strategist Mohit Kumar noted that markets were pricing a 20% chance of a Federal Reserve hike this month, with a December move fully priced in, writing that “it would take a significant upward surprise for the market to shift its pricing for October.”
Economists are forecasting September U.S. headline inflation of between 3.6% and 3.7%, up from 3.4% previously, while core inflation is expected to rise to 2.5% from 2.4%.
Jefferies also warned of geopolitical risks, stating that “there seems to be little progress on the geopolitical front, with a deal looking less likely before the mid-terms,” and flagged “a risk that Trump would launch another bombing campaign post mid-terms.”
Iranian Revolutionary Guards commander Major-General Ahmad Vahidi described the defence industry as “a strategic pillar” for the armed forces, according to the semi-official Tasnim agency, as Iranian defence officials met to discuss sustaining weapons production under wartime conditions.
Iraq’s Oil Ministry said crude exports had reached approximately 2.7 million barrels per day despite disruption to the Strait of Hormuz, a significant recovery from around 200,000 barrels per day in May.
U.S. Central Command rejected claims by the Revolutionary Guards’ navy commander that Tehran controls the strait, stating on social media platform X that U.S. forces helped Gulf partners ship more than 19 million barrels of crude through Hormuz on Monday alone.
Brent crude futures rose 0.47% to $106.19 a barrel, while U.S. West Texas Intermediate gained 0.37% to $94.49, as energy markets remained sensitive to regional tensions.
Among individual UK stocks, Softcat reported a 24.7% rise in annual gross profit to £616.3 million, beating market expectations, and forecast high-single-digit underlying operating profit growth for fiscal 2027, excluding its planned U.S. acquisition of GDT.
Ashmore (LON: ASHM), meanwhile, reported assets under management rising 1% to an estimated $54.5 billion in the September quarter, as $1.1 billion in net inflows offset $600 million in negative investment performance during a late-quarter bond market selloff.