FX.co ★ FTSE 100 Slides on Weak UK Data and Middle East Tensions

The FTSE 100 fell 0.5% to 10,260 on Friday, extending its losing streak to a third straight session and leaving it on course for a 0.2% decline over the week. Sentiment was pressured by weaker-than-expected UK growth figures and mounting geopolitical tensions in the Middle East, and the possible implications for future Bank of England policy.

Data from the ONS showed the UK economy stagnated in January, undershooting forecasts for 0.2% growth, as services output was unchanged and industrial production slipped 0.1%. Over the three months to January, GDP expanded by just 0.2%, a touch below expectations for a 0.3% increase.

Despite the subdued growth backdrop, a surge in energy prices linked to the escalating conflict involving the US, Israel, and Iran has led markets to price in around an 80% chance of a 25-basis-point interest rate hike from the Bank of England by the end of the year.

On the corporate front, Berkeley Group lost nearly 3% even after the housebuilder reaffirmed its profit guidance for the year, warning that the deepening Middle East crisis is “weighing heavily on risk sentiment.”