British banking stocks surged to multi-month highs this week as investors reacted to the US-Iran ceasefire deal and awaited the Bank of England’s (BoE) interest rate decision. NatWest climbed to 638p, its highest since February, while Lloyds and Barclays posted strong gains, with Barclays up 40% from its annual low. The rally was underpinned by a US-brokered agreement to halt Iran hostilities for 60 days, reopening the Strait of Hormuz and providing sanctions relief. Crude oil prices tumbled below $80 per barrel, easing inflationary pressures and brightening the outlook for the UK economy.
Meanwhile, the FTSE 100 index slid 0.94% to 10,410.01 points, weighed down by financial and mining stocks. The London Stock Exchange Group fell 3.5% after a downgrade, while precious metal miners suffered a 5% sector-wide drop. Tesco slipped 2.2% on slowing sales growth, and homebuilders declined 2.6% ahead of the rate decision. The BoE is widely expected to keep rates at 3.75%, though the Federal Reserve’s signal that it may hike later this year has added caution. Polymarket traders see a 58% chance of a UK rate increase in 2026, which could boost bank net interest income but pressure rate-sensitive sectors.
UK inflation data came in below expectations, with the headline CPI steady at 2.8% and core CPI at 2.6%. That, combined with falling oil prices, gives the BoE room to hold, but the hawkish tone from the Fed has kept risk assets on edge. Crypto markets, which often trade as risk-on assets, are closely watching these macro signals. A prolonged period of elevated rates or further tightening could dampen liquidity and demand for digital assets, while easing geopolitical tensions might provide some short-term relief. For now, the mixed picture leaves the crypto market in a wait-and-see mode, with traders parsing central bank rhetoric for clues on the next move.
