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FTSE 100 LIVE: London hits fresh high as UK inflation fall increases odds of March interest rate cut

A deep dive into what's moving markets and happening across the global economy 

LaToya Harding · Business Reporter, Yahoo Finance UK

Updated Wed 18 February 2026 at 6:07 pm GMT+9 2 min read

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The FTSE 100 (^FTSE) and European stocks advanced on Wednesday as UK inflation fell to its lowest level in almost a year, paving the way for the Bank of England to cut interest rates next month.

The consumer price index (CPI), which measures prices changes across the economy, dropped to 3.0% in the year to January, the Office for National Statistics (ONS) revealed, in line with city forecasts.

This was down from 3.4% in the 12 months to December, and the lowest rate of annual inflation since March 2025.

On a monthly basis, prices fell by 0.5% in January, with transport, and food and non-alcoholic beverages being the largest downward contributions.

**Read more: **UK inflation falls to lowest since March 2025

Core CPI, which strips out energy, food, alcohol and tobacco, rose by 3.1% during the period, down from 3.2% in December. Meanwhile, goods inflation declined to 1.6% from 2.2% and services inflation slipped from 4.5% to 4.4%.

A March quarter-point interest rate cut is now currently seen as an 81.5% chance, up from 77% last night, and around 65% last week.

Scott Gardner, investment strategist at JPMorgan Personal Investing said: “In theory, this fall in inflation could signal a rate cut from the Bank of England at its March meeting barring any surprises between now and then.”

“The progress made on the inflation front over recent months and clear cooling in the jobs market could encourage policymakers to cut interest rates for a seventh quarter in a row. With that said, the Bank of England will remain vigilant as services inflation remains elevated.”

London’s benchmark index (^FTSE) was 0.5% higher in early trade, hitting a fresh all-time high. It has gained around 6.6% so far this year.

Germany's DAX (^GDAXI) dipped 0.5% and the CAC (^FCHI) in Paris headed 0.4% into the green.

The pan-European STOXX 600 (^STOXX) was up 0.5%.

Wall Street is set for a positive start as S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) were all in the green.

The pound was flat against the US dollar (GBPUSD=X) at 1.3563.

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LIVE 2 updates

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9 mins ago 

LaToya Harding

 

 

Asia and US overnight
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Asian equity markets are higher this morning but with still low volumes due to the closure of markets in mainland China, South Korea, and Hong Kong.

 

Japanese stocks are recovering from losses incurred earlier this week, with the Nikkei (^N225) trading 1% higher.

 

On Wall Street, stocks remained little changed on the first day of trading this week, following Monday’s bank holiday, as investors await the minutes from January’s Federal Reserve meeting.

 

The S&P 500 (^GSPC), the Dow Jones Industrial Average (^DJI) and the tech-heavy Nasdaq Composite (^IXIC) all climbed about 0.1%

 

Volatility re-emerged across AI linked equities, with the VIX at one point nudging up towards YTD highs (just shy of 23).

 

The Philadelphia Semiconductor Index (-0.02%) recovered from being down more than -2.5% intraday, the software & services (-1.59%) segment still led the declines within the S&P 500.

 

Some defensive sectors also struggled, with consumer staples down -1.51% as Walmart (WMT) fell -3.76% from what had been a 20% gain year-to-date. Volatility was also evident across other high profile 2026 themes, with Brent crude (BZ=F), gold (GC=F) and Bitcoin (BTC-USD) all ending weaker, in part thanks to cautiously upbeat comments out of US-Iran talks.

 

Osaka - Delayed Quote • USD   

 

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    *    

33 mins ago 

LaToya Harding

 

 

Coming up
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Good morning, and welcome back to our markets live blog. As usual we will be taking a deep dive into what's moving markets, and happening across the global economy.

 

Looking ahead, upcoming data include US January industrial production, capacity utilisation, the leading index and December durable goods orders. Elsewhere, UK January CPI, RPI and PPI data are due, alongside Canada’s January existing home sales.

 

Central bank events include the release of the FOMC meeting minutes and speeches from ECB members Villeroy and Schnabel.

 

Notable earnings include Analog Devices and Booking, while the US Treasury will auction $16bn of 20 year bonds.

 

Here's a snapshot of what's on the agenda for today:

 

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    **7am:** Trading updates: Glencore, BAE Systems
    
     
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    **7am:** UK inflation report for January
    
     
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    **9.30am: **UK house prices and rents data for December
    
     
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    **1.30pm: **US housing starts and building permits data
    
     
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    **1.30pm: **US durable goods orders

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