The FTSE 100 gained 0.3% on Friday, outperforming a broader European sell-off. Investors digested fresh UK retail sales data, which rose 0.4% in December, rebounding from November's decline and beating economist forecasts. The Bank of England's upcoming rate decision remains a key focus for markets.

UK retail sales jumped 2.5% annually, exceeding the 1.0% forecast. The data provides a crucial read on consumer health ahead of the BoE's policy meeting. Meanwhile, corporate news saw Babcock International report solid growth, while Group lowered its profit outlook citing weak consumer confidence post-Budget.

Sterling slipped slightly against the dollar. The market's focus now turns to the BoE's decision, where the stronger-than-expected sales figures could influence the timing of any future rate cuts. Investors will also watch for further corporate updates as earnings season continues.