UK stocks close higher as weaker sterling boosts export-heavy sectors

On Wednesday, the UK's stock market saw a rise as weaker sterling boosted export-heavy sectors, leading to a higher finish for the day. The FTSE 100 index closed at 10,724.86 points, up 0.7%, while the FTSE 250 midcap index saw a 0.1% increase. Stronger-than-expected US inflation data supported the dollar, which in turn enhanced risk appetite for sectors that rely heavily on export revenues.

Pharmaceutical companies AstraZeneca and GSK surged by more than 3.4% each, while consumer goods giant Unilever climbed 2.5%. Luxury retailer Burberry experienced a notable increase of 3.5%, among the top gainers on the FTSE 100. Homebuilders also benefited, advancing 3.2% following the Bank of England's chief economist Huw Pill expressing skepticism about the anticipated four rate hikes over the next year.

The BOE's cautious outlook, aligned with the weak labor market, suggests any rate hike would be considered as insurance. Meanwhile, precious metal miners saw a decline of 3.5%, tracking the weaker gold and silver prices. Self-storage firm Big Yellow experienced a rise of 5.4%, following activist investor Ancora's call for a strategic review, indicating potential takeover interest.

IT firm Softcat, on the other hand, saw a drop of 10.7%, reaching its lowest since May 29, due to concerns over a slower growth outlook for 2027. Investors are now looking forward to the UK's August GDP figures, expected to be released on Thursday.