By Shashwat Chauhan and Shubham Batra
(Reuters) -The UK's FTSE 100 closed slightly higher on Wednesday as the pound slid following data showing the UK economy contracted in October, while markets awaited the Federal Reserve's rate decision later in the day.
The blue-chip FTSE 100 index edged up 0.1%, with major dollar earners like AstraZeneca (NASDAQ:AZN) up over 2%. The more domestically-focussed FTSE 250 mid-cap index also rose 0.2%.
Bucking the trend, shares of automobiles and parts fell to a one-month low, dropping 3.7%.
The pound tumbled and was last down 0.3% against the dollar at $1.2522, after official data showed Britain's economy shrank in October, raising the risk of a recession.
"The damage done by high interest rates is still feeding through the economy," said Michael Field, European market strategist at Morningstar.
"Therefore, any cuts from here will take time to materialise in terms of increased business investment and consumer spending. Meaning, while 2024 might be a step in the right direction for the economy, don’t expect a fast rebound in economic growth."
The BoE, along with the European Central Bank, will be releasing its rate decision on Thursday. Both are expected to hold rates steady.
Separately, Goldman Sachs (NYSE:GS) lowered Britain's 2023 economic growth rate forecast to 0.5%, from its previous outlook of 0.6%.
Later in the day, the Fed will announce its monetary policy decision, with the consensus tilted towards the central bank holding rates steady.
Among individual stocks, Entain (LON:ENT) jumped 5.1% after the betting firm said its CEO Jette Nygaard-Andersen would step down from the group with immediate effect.
B&M European Value Retail dropped 6.3% after SSA Investments sold about 2.8% of issued ordinary share capital in the discount retailer by placing of shares at a discount of nearly 3%.