Investing.com — British stocks edged slightly higher on Wednesday even as data showed UK inflation held steady in May, with a hotter-than-expected services reading keeping the Bank of England cautious ahead of Thursday’s rate decision.
The rose 0.1%, while the gained 0.2% and the fell 0.2%. Sterling fell 0.2% against the dollar to $1.3395.
The Office for National Statistics said CPI rose 2.8% in the 12 months to May, unchanged from April and below economists’ forecasts of a rise to 3%.
On a monthly basis, prices rose 0.2%, also steady. Transport made the largest upward contribution, with air fares jumping 10.3% between April and May, while food and non-alcoholic beverages provided the biggest drag, with annual food inflation easing to 2.2%, its lowest since December 2024.
The services measure proved stickier, however, accelerating to 3.7% from 3.2%, which analysts said may limit how far the pound falls and could keep the Bank of England cautious when it meets Thursday.
Jefferies’ Mohit Kumar noted that with crude below $80, “there is no reason to be hawkish,” and expects incoming Fed Chair Warsh to sound noncommittal at his first press conference later Wednesday, with the Fed meeting seen as a “clearing event” for risk assets.
gained 0.8% to $79.65 a barrel, while WTI gained 1% to $76.80.
Five sanctioned Iranian vessels have crossed the U.S. naval blockade line in the Gulf of Oman in the past 24 hours, though commercial traffic through the Strait remains in the single digits versus a historic daily average of around 135 vessels.
Major shipping firms say they need clarity and security guarantees before resuming normal operations.
U.S. President Donald Trump on Wednesday said the agreement is “not final,” warning the U.S. could resume bombing Iran “if they don’t behave,” and said the deal does not include immediate sanctions relief. G7 leaders praised the deal as a “breakthrough” but called for an immediate ceasefire in Lebanon and Hezbollah’s disarmament.
Israel has continued limited strikes in Lebanon since the agreement was announced, with Iran warning that continued Israeli presence there would violate the deal. U.S. officials say Israel’s withdrawal from Lebanon is not a condition of the agreement, describing it as a two-way ceasefire that allows Israel to respond if Iran cannot rein in Hezbollah attacks.
Israeli National Security Minister Itamar Ben-Gvir said Wednesday that “Trump’s agreement does not bind us.”
Jefferies expects the Fed to take rates toward neutral with two cuts over the next 12 months, maintaining long positions at the front end of the curve in the US, UK and Europe, with a preference for the US and UK given the ECB’s historically tighter inflation stance.
UK round up
completed the sale of its operations in six European countries to Meraki Capital for net cash proceeds of around £4 million, and is exploring exit options for a further seven markets.
reported a 16% rise in annual adjusted pretax profit and proposed £20 million of shareholder returns via a special dividend and buyback.
raised its profit forecast for the fourth time, now expecting 2026 adjusted operating profit at or slightly above the top of its £53-57 million range, citing robust sales and a stabilising Nigerian naira.