UK Inflation held steady at 3% this morning to keep in line with projections, although it is expected that inflation will start to climb upwards again as this reading for February was taken before the beginning of the Middle Eastern conflict. 

Markets are currently navigating a complex “wait-and-see” period, as traders balance the surge in geopolitical headlines versus critical macroeconomic data.

Markets opened this week against the backdrop of a sharp escalation in tensions between the US, Israel and Iran over the weekend. Coordinated strikes targeted key Iranian military and nuclear-linked sites, including facilities associated with missile production and nuclear development, marking a significant step-up in direct confrontation.

The continued conflict in The Middle East has kept Oil prices elevated above $100 per barrel as the war seems set to continue after an Israeli air strike killed Iran Security Chief Ali Larijani.

Last week was a difficult one for Sterling. Cable closed out the week at 1.3220, and with oil prices breaching $100 per barrel once again, the broader macro backdrop remains unsettled.

Markets end the week with the U.S. Dollar remaining firmly supported as geopolitical tensions in the Middle East continue to dominate sentiment. Rising oil prices and disruption to shipping through the Strait of Hormuz have pushed investors toward safe-haven assets, and raised concerns about inflation returning.

Oil prices have risen above $100 per barrel due to increasing signs of energy market disruptions, even after 32 countries agreed a deal for the biggest ever energy reserve release.

Oil prices fell further earlier this morning after a release by the Wall Street Journal suggested the International Energy Agency was planning its largest ever emergency oil reserve release to attempt to offset the impact of the Iran war.