The pound today traded above $1.35 after retail sales beat expectations and the UK private sector recorded a jump in activity.
Online jewellery demand boosted December’s retail performance, while the services industry underpinned the best PMI reading since April 2024.
The FTSE 100 index finished a volatile week in calm fashion, while the gold price fell back after earlier nearing the $5000 threshold.
FTSE 100 Live Friday
- Business activity surges
- Retail sales higher in December
- Babcock CEO to step down
Market update: M&S leads FTSE 100, Babcock falls on CEO succession
10:24 , Graeme EvansEncouraging signs from the UK economy today took centre stage in a session when the FTSE 100 index drifted and the gold price resisted $5000 an ounce.
A 0.4% rise in December retail sales followed by figures showing the fastest expansion in business activity since April 2024 provided the UK cheer.
The pound traded above $1.35 after the latest purchasing managers’ index (PMI) reading jumped to 53.9 from December’s 51.4. An accelerated upturn in service sector activity to a 21 month high of 54.3 drove the improvement
The FTSE 100 index ended a volatile week in subdued mood at a broadly unchanged 10,152.51, with easyJet and British Airways and Aer Lingus owner IAG among the biggest fallers after declines of more than 2%.
Burberry fell 4% or 52p to 1222.5p as the worst performing stock, leaving the luxury goods group where it was prior to Wednesday’s encouraging trading update.
Babcock International fell 2% or 28p to 1436p as a strong third quarter update was overshadowed by the retirement plans of chief executive David Lockwood.
Having transformed the fortunes of the defence engineering group since September 2020, Lockwood will hand over to insider Harry Holt at the end of the year.
City bank Berenberg said it viewed Holt as a strong replacement, noting his impressive track record as CEO of the Nuclear division – the fastest-growing and highest-margin segment within Babcock since 2023.
Fellow defence firm BAE Systems moved 1% or 24p higher at 2009p near the top of the FTSE 100, which was led by Marks & Spencer after a rise of 7p to 368.2p.
Endeavour Mining lifted 16p to 4290p but had been higher after the price of gold set a record $4966 an ounce. However, the precious metal later settled at $4925.
Business activity upturn fastest since April 2024
09:47 , Graeme EvansUK businesses have made a better-than-expected start to the year after the latest purchasing managers’ index (PMI) score jumped to 53.9 from December’s 51.4.
The highest reading since April 2024 is indicative of quarterly GDP growth approaching 0.4%. The PMI has been above the neutral 50 threshold for the past nine months.
An accelerated upturn in service sector activity to a 21 month high of 54.3 drove the improvement as some respondents said post-Budget clarity had helped to boost investment spending among clients.
Manufacturing production increased modestly, reaching a three-month high at 51.5.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said UK businesses showed encouraging resilience in the face of recent geopolitical tensions.
He added: “Companies are reporting higher demand, both from home and export markets, which has driven output growth to the fastest since April 2024.
“Firms are also reporting the greatest optimism about the business outlook since before the 2024 Autumn Budget.”
An upturn in order books failed to stem a steep loss of jobs, which companies commonly blamed on the need to reduce high costs.
Poundland completes overhaul as quarterly sales fall
09:19 , Graeme EvansPoundland has said its sweeping restructure that saw it shut nearly 150 shops and axe 2,200 jobs has finished, but that it still has “much to do” to get back on track.
The discount retailer, which secured High Court approval for its restructuring plan last August, confirmed it ended the year with 651 sites, down from around 800 before the reorganisation.
Christmas trading figures today showed like-for-like underlying sales dropped 2.9% in the quarter to December 28 as it slashed prices to get back to its discount roots. Comparable store sales by volume lifted 2%.
TikTok seals deal to remain in the US
08:35 , Graeme EvansTikTok has finalised a deal to keep operating in the US, securing its future in the country after it faced the threat of a nationwide ban.
The popular video-sharing app has established a new majority American-owned joint venture that it says will “operate under defined safeguards that protect national security”.
It follows US President Donald Trump signing an executive order last September allowing it to keep operating and paving the way for the spin-off.
FTSE 100 higher, Babcock down 2% amid CEO succession plan
08:27 , Graeme EvansThe FTSE 100 index has risen 28.50 points to 10,178.55, with Rolls-Royce and BP among the stocks up by about 0.5%.
Gold miner Endeavour Mining is the best performing blue-chip company after shares rose by another 1% or 58p to 4332p.
Consumer healthcare products firm Haleon rose 5.7p to 383.8p after Barclays lifted its price target to 420p.
Babcock International is down 2% or 31p to 1433p after the defence engineering firm said that chief executive David Lockwood is to retire later this y ear.
Burberry shares fell 22.5p to 1252p, while British Airways owner IAG has dipped 3.9p to 426.4p.
Bank of Japan keeps rates on hold, lifts inflation outlook
07:54 , Graeme EvansTokyo’s Nikkei 225 today closed 0.3% higher after the Bank of Japan voted 8-1 to keep interest rates on hold at 0.75%.
However, the bank reinforced market expectations for rate hikes later this year by raising its projections for growth and inflation.
IG said: “The yen weakened slightly to around 158.6 per dollar, while Japanese bond volatility went unaddressed in the statement, leaving investors cautious despite stable markets.”
Meanwhile, Wall Street futures are pointing to a positive start to today’s session.
Golden Quarter disappoints for retailers, outlook uncertain
07:44 , Graeme EvansCapital Economics said December’s unexpected rise in retail sales volumes wasn’t enough to prevent yet another disappointing “Golden Quarter” for the retail sector, with sales declining by 0.3% on the previous three months.
Whilst the consultancy doesn’t expect volumes to continue to decline, it suspects that retail spending growth and broader consumer spending growth will remain fairly soft in 2026.
It added: “With little improvement in GfK consumer confidence in January, we think that the combination of weak employment and slower wage growth will prevent a meaningful pick-up in consumer spending growth in 2026.”
Today’s figures showed that online jewellers enjoyed a particularly strong Christmas.
Wealth Club investment manager Nicholas Hyett said: “In uncertain times shoppers seem to be being drawn to dual purpose jewels that not only tick the Christmas present box, but provide a convenient long-term store of value as well."
Babcock CEO to stand down after leading turnaround
07:25 , Graeme EvansDefence engineering business Babcock International today said chief executive David Lockwood is to stand down by the end of this year.
He has overseen the strategic and financial transformation of the FTSE 100-listed company since taking on the role in September 2020.
Lockwood will be replaced by Harry Holt, who leads Babcock's nuclear sector.
Babcock chair Ruth Carnie described Lockwood as an exceptional chief executive and said he left the group in a “very strong position for the future”.
The change was announced alongside a third quarter trading update, which showed Babcock is on track for to meet its 2026 margin target of 8%.
Retail sales higher in December, gold demand boosts online jewellers
07:13 , Graeme EvansRetail sales volumes rose by a better-than-expected 0.4% in December, following falls of 0.1% in November and 0.8% in October.
The Office for National Statistics (ONS) recorded a decline of 0.3% across the fourth quarter but said sales rose by 1.3% in 2025. They are still down by 1.5% compared with their pre-Covid pandemic level in February 2020.
Online retail volumes rose in December, following falls in October and November, with internet jewellers reporting strong demand for precious metals.
ONS senior statistician Hannah Finselbach said: “The last three months of the year saw a slight drop in retail sales following a strong third quarter, with supermarkets and online stores both down.
“However, sales were up in December, with internet retailing doing well. Within this, online jewellers had a strong month and told us there was higher demand for gold and silver.
“Across 2025 as a whole, retail sales saw a second consecutive annual rise after the large falls of 2022 and 2023, but volumes still remained below their pre-pandemic level.”
Consumer barometer records decade of pessimism
07:07 , Graeme EvansGfK’s long-running consumer confidence index has increased by one point to minus 16, marking ten years since the barometer was last in positive territory.
Confidence in personal finances over the next year rose four points to six, which is eight points higher than this time last year.
However, expectations for the general economic situation over the coming 12 months fell two points to minus 31, although this is three points higher than last January.
GfK consumer insights director Neil Bellamy said: “January 2026 brings an unwanted anniversary, marking 10 years since consumer confidence was last in positive territory.
“Even with a one-point increase in headline confidence this month to minus 16, we remain a long way from consumers feeling that better days are around the corner.
Gold price advance continues, FTSE 100 steady
06:59 , Graeme EvansThe price of gold is close to $5000 an ounce after the precious metal posted one of its strongest weeks since the start of the pandemic.
Today’s level of $4953, which follows a 0.4% rise in Asia trading hours, compares with $4576 at the end of last week. It crossed the $4000 threshold in October.
The price has continued to rise despite President Trump walking back on his tariff threats, a development that boosted Wall Street shares last night.
The Dow Jones Industrial Average and S&P 500 index rose 0.6%, while the Nasdaq Composite finished 0.9% higher.
The FTSE 100 index rose 11.96 points to 10,150.05 but underperformed European peers amid softer mining, energy and defence stocks.
It is seen opening broadly flat this morning.
