FTSE 100 Eases as Inflation Surprise Tempers Rate Cut Hopes

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, was trading declined around 0.27% on 21 January 2026. 

Macro Update: UK macro news centers on the unexpected rise in December inflation to 3.4%, tempering expectations for a quick Bank of England rate cut in February. This follows stronger November GDP growth, indicating some economic resilience amid a cooling labour market and ongoing post-Brexit structural challenges. 

Top Market Movers: Among top gainers on FTSE 100 index, Rio Tinto PLC (LSE: RIO) witnessed a rise of 5.24% followed by Burberry Group PLC (LSE: BRBY) which gained around 4.47%. 

Commodity Update: The U.S. dollar hovered near three-week lows against the euro and Swiss franc on Wednesday, as renewed White House rhetoric over Greenland weighed on U.S. assets, including equities and Treasuries. Gold rose 1.36% to USD 4,834.20, while silver eased 0.95% to USD 93.73. Copper advanced 0.55% to USD 12,851.00. Brent crude declined 1.22% to USD 64.13, pressured by expectations of higher U.S. inventories despite temporary supply disruptions.  

Our Stance: Our stance remains cautious; while November GDP growth exceeded forecasts, the surprising December inflation jump to 3.4% suggests lingering price pressures. We anticipate the Bank of England will hold off on immediate interest rate cuts until a clearer disinflationary trend is established, favouring a 'wait-and-see' approach. 

FTSE 100: The FTSE 100 declined modestly to trade around 10,123 yet continues to hold above the key support zone near 9,800, preserving a stable broader structure. The 21-day and 50-day Simple Moving Averages remain below current levels, offering underlying support and allowing room for near-term consolidation. Momentum has eased, with the RSI showing waning strength. Immediate support is seen around 9,800, while upside resistance is placed near 10,250 and 10,400. 

Source: Charts by REFENITIVD