The FTSE 100 traded mixed as the British pound held gains near $1.27 following reports surrounding Chancellor Rachel Reeves's fiscal plans. Market participants digested speculation over potential tax adjustments and spending priorities ahead of the autumn budget.

Sterling's resilience reflected investor confidence in the government's commitment to fiscal stability. The currency hovered around multi-month highs against the dollar, supported by expectations of sustained Bank of England interest rates.

Blue-chip stocks showed sector divergence, with financials gaining on rate outlook while retailers faced pressure from consumer spending concerns. Trading volumes remained light amid summer holiday thinning.

Analysts noted the market's focus shifting to upcoming UK inflation data and Reeves's first major fiscal statement, which could define the policy trajectory for the remainder of the year.