FTSE 100 Softens as Rate Cut Expectations Build

Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, was trading declined around 0.19% on 08 January 2026. 

Macro Update: In January 2026, the UK economy faces cooling activity with 3.2% inflation and a 5.1% unemployment rate. Following a December rate cut to 3.75%, the Bank of England maintains a cautious downward path as GDP growth remains anaemic. 

Top Market Movers: Among top gainers on FTSE 100 index, BAE Systems PLC (LSE: BA.) witnessed a rise of 5.71% followed by Coca Cola HBC AG (LSE: CCH) which gained around 4.31%. 

Commodity Update: The U.S. dollar traded steadily on Thursday as investors assessed fresh economic data pointing to a fragile U.S. growth outlook ahead of Friday’s key jobs report, while elevated geopolitical tensions capped risk appetite. In commodities, gold slipped 0.25% to USD 4,452.20, silver gained 0.22% to USD 77.77, and copper eased 0.02% to USD 12,889.00. Brent crude rose 0.60% to USD 60.34, rebounding on a larger-than-expected U.S. crude inventory draw and ongoing focus on Venezuela developments. 

Our Stance: The UK's economic stagnation persisted through 2026, with GDP showing minimal growth. Despite a Bank of England rate cut to 3.75%, the fiscal climate remained challenging. A "higher-for-longer" era of elevated unemployment (5.1%) and stubborn inflation (3.2%) continued to define the landscape. 

FTSE 100: The FTSE 100 slipped 25.52 points to trade at 10,022.69, yet continued to hold comfortably above the key support zone near 9,500, preserving its broader constructive structure. The 21-day SMA at 9,845.44 and the 50-day SMA at 9,758.55 remain supportive and suggest a positive underlying bias, leaving scope for short-term consolidation. The RSI remains elevated and continues to strengthen, indicating steady momentum. Immediate support lies around 8,950, while resistance is seen near 10,200 and 10,350. 

Source: Charts by REFENITIVD