(Reuters) – Britain’s benchmark index hit a record high on Friday and was set to log its best month in more than two years, while investors prepared for the Bank of England’s rate decision next week.
The blue-chip FTSE 100 hit an all-time high of 8,692.84 and was last up 0.4% as of 1240 GMT. It has gained 6.2% so far in January.
Meanwhile, the domestically-focussed mid-cap FTSE 250 rose 0.6% and was hovering at a near two-month high. It gained 1.3% so far this month.
The gains were largely driven by U.S. President Donald Trump’s decision to refrain from implementing aggressive tariffs on his first day in office. This unexpected move has calmed the markets, with many analysts suggesting that the tariff threat will serve as a strategic negotiation tool.
British engineering firm Smiths Group’s shares surged 12% to an all-time high after it said it plans to spin off its Smiths Detection business under pressure from U.S. activist investor Engine Capital.
The aerospace and defence sector rose 1.6% to lead sectoral gainers.
Precious metal miners lost 1.1% after jumping 6.8% in the previous session, as prices of bullion hit an all-time high.
On the economic front, British house prices lost some of their momentum in January, rising by just 0.1%.
Investors increased their bets on the pace of interest rate cuts by the Bank of England this year, fully pricing in the chance of three quarter-point by the end of 2025.
Investors now watch out for the PMI figures and subsequently the BoE’s interest rate decision, both due next week.
“With the inflation tiger still proving frustratingly tough to tame and the Bank of England unable to take its foot too far off the brake, mortgage rates look set to stay high through 2025,” said Aaron Hussein, global market strategist at J.P. Morgan Asset Management.
(Reporting by Pranav Kashyap in Bangalore; Editing by Varun H K)
