Sterling Slips as FTSE 100 Eyes Record High

UK inflation slowed more than expected in June, adding pressure to sterling while helping the FTSE 100 push towards record territory.

Headline CPI fell from 2.8% to 2.6% year-on-year, below the 2.7% forecast. Producer input prices also dropped sharply, suggesting cost pressures eased more quickly than expected.

However, the market may not fully trust the improvement. Much of the decline came from lower fuel prices, while oil has since moved higher again. Household energy costs are also rising, which could lift inflation later in the year without improving economic growth.

GBP/USD Correction May Continue

GBP/USD is trading near 1.3370, extending its pullback from the July high around 1.3550.

The softer CPI print reduces the immediate case for further Bank of England tightening. At the same time, traders remain concerned about weak UK growth, higher energy costs and pressure on household spending.

The dollar also looks firm, supported by US rate expectations and demand for defensive assets.

This leaves GBP/USD vulnerable to further downside. A break below 1.3350 could open the way towards 1.3300, with the wider 1.3200–1.3250 area potentially coming back into focus.

FTSE 100 Targets Record Territory

The FTSE 100 is testing resistance near 10,740.

Lower inflation is mildly supportive for UK equities, while a weaker pound benefits many of the index’s large multinational companies by increasing the sterling value of overseas earnings.

The index is also receiving support from energy and mining shares as commodity prices rise.

A confirmed break above 10,740 would bring the record-high region around 10,900–10,930 back into view, leaving the psychological 11,000 level within reach.

For now, the setup points to a continued GBP/USD correction and further upside in the FTSE 100, although both moves still need technical confirmation.