The FTSE 100 jumped on Wednesday in London, as investors cheered following a lower than expected read on UK inflation.

UK inflation dropped to a 15-month low of 7.9% in the year to June, the lowest reading since May 2022. Economists predicted that the rate would dip to 8.2% from 8.7% in both April and May.

The FTSE 100 (^FTSE) was up 1.9% by market close. In Europe, the DAX (^GDAXI) was almost flat, following a morning of gains. The CAC (^FCHI) was up 0.2% in Paris.

"It doesn’t really matter too much what the finer details are and what the actual number is as far as markets are concerned, it’s all about the direction; and it’s going the right way," said Neil Wilson, chief market analyst at Finalto.

There had been hints that inflation was set to fall, as a read on grocery prices on Tuesday showed that supermarket deals had taken the heat out of the market last month.

The fresh data takes the pressure off the Bank of England to hike rates by 0.5% next month, making it more likely the increase will come in at 0.25%.

Read more: UK inflation falls to 15-month low as price rises slow

US stocks also rose as earnings season continues. The S&P 500 (^GSPC) was up 0.4% in early trade on Wall Street. The Dow (^DJI) also rose 0.4% and the Nasdaq (^IXIC) ticked up 0.4%.

Meanwhile, the pound (GBPUSD=X) slipped more than 1% against the dollar, breaking a hot streak where it traded near $1.31. By 3pm in London it was sitting at around the $1.29 mark.

Watch: Inflation falls back by more than forecast to 15-month low

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