Sterling fell sharply on Wednesday after softer-than-expected UK inflation data reinforced bets that the Bank of England will cut interest rates on Thursday, while oil prices rebounded as U.S. President Donald Trump ordered a blockade of sanctioned tankers moving in and out of Venezuela.
The pound dropped around 0.7% against the dollar, while the FTSE 100 climbed to a one-month high as lower rate expectations supported UK equities. European energy stocks also advanced, tracking gains in crude, while miners rose as silver hit a fresh record and platinum extended its surge.
MUFG’s Derek Halpenny said the inflation print strengthened expectations of a more unified Bank of England decision and argued weaker labour market conditions point to a clearer need for cuts—potentially beyond this week.
Oil snapped a recent decline, with Brent futures up about 1.8% and back near $60 a barrel in London following Trump’s Venezuela-related move. The rebound came after a steep weekly drop driven by investor focus on Russia-Ukraine peace prospects and the possibility of softer sanctions on Russian oil.
Global equity markets were mixed as investors digested the latest U.S. jobs report, which showed stronger payroll growth but a rise in unemployment to 4.6%. Analysts cautioned that data collection disruptions could limit the signal from the release, though many still see signs the U.S. labour market is cooling faster than expected.
Attention now shifts to Thursday’s U.S. inflation report, with Treasury yields slightly higher ahead of the data. In Europe, German yields edged lower, while UK gilt yields fell after the inflation surprise.
Central banks remain in focus, with policy decisions also due from the European Central Bank, while investors continue to price the risk of a rate hike in Japan, where fiscal concerns and rising bond yields have weighed on the yen.
