Market wobble after another oil escalation

Another round of tense exchanges between the United States and Iran sent investors dashing towards shelter to start the week. In a predictable escalation that all but ended the fragile ceasefire, Donald Trump suggested he would force the reopening of the Strait of Hormuz and the United States would resume its blockade of Iran’s ports.

Sterling was still little moved across Monday. However, with Andy Burnham sealing the Labour leadership in a vote last night and due to move into Downing Street early next week, the prospect of higher energy prices has only added to the risks it faces.

To read more about the rather extraordinary collection of challenges facing currency markets at the moment, don’t forget to get your copy of our July-September Quarterly Forecast. The report shows the huge difference in where big banks are predicting the pound will move over the summer.

Oil was again the big story on Monday after a weekend of ill-tempered exchanges. The price of brent crude (a financial metric we’re sure you were relieved to stop reading about) climbed by 3% yesterday, while UK petrol stations responded immediately by hiking costs at the pump.

The rout carried over into AI chip stocks in Asia and tech in America, though. That was a reminder of just how much the Strait of Hormuz had been clouding the mood, as well as why a prolonged conflict is feared across the globe.

For his part, President Trump was not exactly in conciliatory mood. Trump claimed that the US will be the guardians of the Strait of Hormuz, as well as claiming a 20% flat fee on all cargo that crosses the vital waterway.

Finally, Andy Burnham won the backing of all the Labour cabinet members eligible to run against him in a leadership challenge last night, meaning he is now guaranteed to be the UK’s next prime minister. In an online hustings last night, Burnham reiterated his promise to promote growth in every postcode, as well as a more collaborative relationship between parliament and Downing Street.