Wall Street was muted after on Wednesday as investors digested fresh results from Morgan Stanley ( MS ) and others, to potentially power a rebound to record highs after an ASML-fuelled ( ASML ) slide.

The FTSE 100 ( ^FTSE ) also outperformed against its European peers, thanks to a weaker pound, as new data showed that UK inflation fell to lowest level in three years .

According to the Office for National Statistics (ONS), the Consumer Price Index (CPI) fell to 1.7% in the year to September, the lowest rate since April 2021 and down from 2.2% in August.

This means inflation has fallen below the government-set target of 2% for the first time since 2021. Core inflation, which excludes energy, food, alcohol and tobacco, dropped to 3.2% from 3.6% in August. Money markets predict a 91% chance of a quarter-point cut from the Bank of England at its next meeting in early November. This is up from just below 80% before the inflation report was released.

This would bring UK interest rates down from 5% to 4.75%.

"British inflation's downward trajectory, combined with slowing wage growth, emphasises Bank of England governor Andrew Bailey's latest comments that the bank will get 'more aggressive' on its rate policy," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

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