U.K. equities traded higher on Friday morning, supported by a resilient pound and broad gains across European markets. Analysts noted that sterling’s strength appears to be driven more by a short squeeze than by any major shift in perceptions of U.K. sovereign risk.

By 09:25 GMT, the FTSE 100 was up 0.2%, while GBP/USD also advanced 0.2%, moving above 1.33. Elsewhere in Europe, Germany’s DAX rose 0.3% and France’s CAC 40 matched that increase.

Market highlights in the U.K.

Ocado Group PLC (LSE:OCDO) rallied nearly 10% after revealing it will receive a $350 million cash payment from U.S. retailer Kroger. The payout follows Kroger’s decision to shut three robotic customer fulfillment centers in early 2026 and cancel plans for a new site in Charlotte, North Carolina. The cash infusion is expected in January.

In contrast, shares of Big Yellow Group PLC (LSE:BYG) fell 5.3% after Blackstone Europe formally withdrew from making a takeover bid. This came shortly after Big Yellow announced there was “no basis to continue discussions” and declined to extend the December 8, 2025 put-up-or-shut-up deadline. Blackstone confirmed via regulatory filing that it does not intend to pursue an offer, triggering Rule 2.8 restrictions under U.K. takeover rules.

Housing data showed further cooling in the property market. The Halifax House Price Index indicated that average home prices were unchanged in November following a 0.5% gain in October. The typical property value inched up by just £139 to £299,892—a new record—while annual growth slowed sharply to 0.7%, the weakest pace since March 2024.

On the currency front, sterling continued to firm. ING analysts reiterated that the recent rally is likely a short squeeze rather than a shift in fundamentals. They highlighted that the 10-year Gilt swap spread remains narrower at 48 basis points, down from 58 in late September. ING maintains a year-end GBP/USD forecast of 1.34 but anticipates some underperformance versus the euro as the Bank of England resumes rate cuts this month.

Broker moves and corporate updates

J.P. Morgan began coverage of Greggs PLC (LSE:GRG) with an overweight rating and a 2,110p price target for December 2027, implying around 35% upside from the stock’s 1,590p close on December 4. The broker pointed to depressed valuations despite what it views as industry-leading operational performance and clear catalysts ahead.

In a separate sector call, J.P. Morgan struck a more cautious tone on European oil and gas stocks entering 2026. In its latest EU Oils Outlook, the bank noted that the sector saw “significant positive decoupling” in the second half of 2025, outperforming broader European markets by 6% even as Brent crude fell 7%. However, the firm now sees valuations as “full,” citing a projected 2026 free cash flow yield of 7.8% at $62 Brent—high relative to historical norms.

Elsewhere, Halma PLC (LSE:HLMA) announced the acquisition of E2S Group Ltd for £230 million in cash. The deal, funded through existing facilities, strengthens Halma’s offering in industrial safety and further expands its footprint in fire detection and alarm technologies.

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