The FTSE 100 was on track to end a four-week losing streak on Friday as softer UK economic data reduced expectations of an immediate interest rate increase from the Bank of England.
The blue-chip index rose 0.21%, while the FTSE 250 gained 0.57% as investors welcomed signs that pressure on the Bank of England to tighten monetary policy may be easing.
Official figures released on Friday showed British retail sales suffered their steepest monthly fall in almost a year during April, adding to evidence that consumer spending is weakening amid higher energy costs and economic uncertainty linked to tensions in the Middle East.
Earlier in the week, separate data also indicated that inflation slowed more than expected in April while unemployment edged higher, reinforcing expectations that policymakers may delay further rate increases.
Analysts at BofA Securities said the softer economic data should reduce the urgency for the Bank’s Monetary Policy Committee to act quickly. The brokerage now expects the next rate hike to come in July rather than June.
BofA also warned that growing political uncertainty could tighten financial conditions further and weigh on economic growth. Prime Minister Keir Starmer continues to face pressure within the Labour Party as voters remain frustrated over the cost of living.
Among sector performers, chemical stocks rose 2.87% while automobile shares gained 2.45%. The FTSE 100 has climbed around 2.65% over the course of the week so far.