FX.co ★ FTSE 100 Falls by Over 1%

The FTSE 100 saw a decline of more than 1% on Friday, trailing behind other European markets. This drop followed a surge in UK gilt yields and a weakening of the pound, spurred by news that Chancellor Rachel Reeves might abandon plans for an income tax increase in the upcoming November 26 budget. This development has reignited concerns over the UK's fiscal stance, causing money markets to revise downwards their expectations for Bank of England rate cuts to less than 60 basis points by the end of 2025. The banking sector was particularly hard-hit, with shares in Lloyds, Barclays, and NatWest falling by over 3.5%, while Standard Chartered and HSBC also experienced declines of 2.8% and 1.6%, respectively. The homebuilding sector faced significant losses, with Barratt Developments, Redrow, Persimmon, and Berkeley all seeing sharp decreases in their stock prices. Rolls-Royce shares also dropped nearly 2%. However, a handful of companies, including Shell and BP, posted gains as oil prices recovered. Despite achieving record highs in 2025 due to its defensive, value-driven composition and low exposure to technology stocks, the FTSE 100 is now experiencing renewed pressure amid fiscal uncertainty.