U.K. stocks rose for a second straight day on Wednesday, moving higher after a disappointing reading on Britain’s inflation reduced pressure on the Bank of England to raise interest rates next month. Miners were among biggest advancers as metals prices rallied on concerns further sanctions against Russia could dent supply. The FTSE 100 index
climbed 1.3% to end at 7,317.34, logging its highest close since early February, according to FactSet data. The pound dropped to $1.4220, down from $1.4290 late Tuesday in New York and falling from an intraday high of $1.4315. Sterling briefly dipped below $1.42 during Wednesday’s session to an intraday low of $1.4173. A weaker pound tends to prop up the British blue-chip index as its multinational companies generate most of their sales in foreign currencies.The moves in both the pound and the FTSE came after data showed U.K. inflation fell to 2.5% in March from 2.7% in February. Analysts had expected consumer prices to have risen 2.7%. The weaker reading is good news for households, but could give BOE Gov. Mark Carney a headache ahead of next month’s policy-setting meeting. The market is still pricing in an interest-rate rise, but the fall in inflation could make an increase less of a done deal.
Sterling earlier this week jumped above $1.43 and reached its highest level since the Brexit vote in June 2016 on rising expectations the U.K. central bank will tighten policy. The pound, however, already started to unravel on Tuesday after data showed February wages including bonuses rose less than some had expected. The gains on the U.K. stock market on Wednesday were also propelled by corporate news. Miners were among top performers, after Rio Tinto said quarterly iron-ore exports from its Australian mines rose 5%. Shares of the mining major ended up 5.4%, also boosted by gains in metals prices.
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