UK Economy Shows Resilience Amid Strong Services Rebound:

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Index Update: The FTSE 100 index, a key benchmark index for the London stock exchange, went down around 0.46% on 26 August 2025.  

Macro Update: Recent data from the UK suggests a notable economic rebound, as business activity climbs to its highest level since August 2024. According to UBS economist Dean Turner, the latest Purchasing Managers’ Index (PMI) readings show a surge in the services sector, with firms citing strong consumer demand as a key driver. This momentum could help ease fears of an impending slowdown and may offer a political boost to the UK government. However, persistent cost pressures remain a concern, particularly as companies continue to pass on National Insurance-related expenses to consumers without dampening demand—a sign that pricing power remains intact in the current environment. 

Top Market Movers: Among top gainers on FTSE 100 index, Bunzl PLC (LSE: BNZL) witnessed a rise of 5.88% followed by Fresnillo PLC (LSE: FRES) which gained around 1.98%. 

Commodity Update: The dollar and U.S. Treasuries weakened Tuesday after President Trump’s unprecedented dismissal of Fed Governor Lisa Cook, raising concerns over central bank independence. The move pressured the dollar against the yen and euro. Gold rose 0.16% to $3,422.90, silver slipped 0.01% to $38.70, copper gained 0.70% to $9,848.35, and Brent crude fell 0.44% to $67.92. Oil eased as markets weighed U.S. sanctions on Russia against Ukraine conflict risks and rate-cut hopes. 

Our Stance: Despite the Bank of England’s recent decision to lower its base rate to 4%, monetary policy remains restrictive, and uncertainty lingers over the timing of further rate cuts. Turner warns that inflation expectations may be becoming embedded, complicating the BoE’s path forward. Meanwhile, in the United States, political turmoil has added to monetary policy uncertainty, following former President Trump’s controversial attempt to dismiss Federal Reserve Governor Lisa Cook—a move she claims is legally invalid. This divergence in policy outlooks between the UK and the US could lend short-term strength to the pound, particularly if the dollar continues to weaken amid political instability. 

FTSE 100 

In its latest session, the FTSE 100 Index slipped by 48.50 points, closing at 9,272.90, with a bearish candlestick formation signaling near-term selling pressure. Despite this pullback, the broader technical outlook remains constructive. On the daily chart, the index continues to trade above its 21-period Simple Moving Average (SMA), a dynamic support level that reinforces the prevailing short-term bullish trend. A key support zone is identified at 9,165, and holding above this level will be critical to maintaining the ongoing uptrend. On the upside, a decisive breakout above immediate resistance levels would act as strong bullish confirmation, potentially unlocking fresh upward momentum and reinforcing investor sentiment in favor of the bulls. From a broader perspective, the index also maintains its position above the 21-period SMA on the weekly chart, underscoring the resilience of its long-term bullish structure despite short-term volatility.