FTSE 100 Awaits BoE Decision as Oil Stays Volatile

The FTSE 100 is in focus today as markets await the Bank of England’s interest rate decision, with recent oil price moves likely to weigh on policymakers’ discussions. European and US bond yields held steady in narrow ranges amid rising geopolitical tension and uncertainty over US military action in the Middle East. Meanwhile, investors digested Fed Chair Jerome Powell’s warning that upcoming tariffs could add to inflation, despite the central bank still forecasting rate cuts this year.

Equities

The FTSE 100 rose 0.1% on Wednesday, lifted by gains in bank shares, which climbed 1.1% as investors digested the latest inflation figures and looked ahead to the Bank of England’s interest rate decision. Inflation cooled to 3.4% in May, in line with expectations, keeping rate cut hopes alive for later in the year. Middle East tensions and the potential for further oil price pressures kept the mood cautious.

Among UK-listed companies, ME Group surged 9% after announcing it was considering strategic options, including a possible sale. Electronics retailer AO World posted record profits for the 2025 financial year, but shares dropped 3.6% by the close, reversing early gains. In the pharmaceutical sector, GSK fell 2.1% and AstraZeneca slipped 1.1% after Donald Trump signalled that new tariffs targeting the pharmaceutical sector would be introduced.

In the US, the S&P 500 ended the day flat, slipping 0.03% to 5,980.87 after earlier gains were wiped out by comments from Federal Reserve Chair Jerome Powell. Powell warned that goods price inflation is likely to rise over the summer due to tariffs introduced by President Trump. The Fed kept interest rates unchanged and maintained its forecast for two rate cuts this year, although an increasing number of policymakers now expect no cuts at all. The Dow fell 0.1% to 42,171.66, while the Nasdaq rose 0.1% to 19,546.27.

Circle Internet rose 33.8% following news that the US Senate had passed a bill establishing a regulatory framework for stablecoins, boosting confidence in the cryptocurrency issuer. Nucor gained 3.3% after issuing a second-quarter profit forecast that beat analyst expectations.

Forex & Commodities

The US dollar strengthened on Thursday, rising 0.11% on the dollar index to 99, putting it on track for a weekly gain of 0.9%, its strongest since January. Safe-haven demand increased after reports indicated US officials may be preparing for possible military strikes on Iran, following escalating conflict with Israel. The yen traded at 145.13 per dollar, while the euro dropped 0.25% to $1.1455, heading for its biggest weekly loss since February. Sterling slipped 0.14% to $1.3403 ahead of the Bank of England’s rate decision, with no change expected.

Federal Reserve Chair Jerome Powell said on Wednesday that goods price inflation is likely to rise over the summer, as new tariffs from President Donald Trump start affecting consumer prices. The Fed left interest rates unchanged but still projected two rate cuts by year-end. However, some Fed officials expect no cuts at all. Analysts at ING said a September cut looks too early, with the possibility of only one move this year.

Gold edged higher by 0.1% to $3,371.15 an ounce, supported by geopolitical tension as the Iran-Israel conflict stretched into its seventh day. US gold futures were down 0.6% at $3,388.60. Platinum rose 1% to $1,336.08, earlier touching $1,348.72—its highest level since 2014—on concerns over tight supply and high lease rates. Palladium rose 1.1% to $1,059.96, while silver held steady at $36.72 per ounce.

Brent crude fell 0.26% to $76.50 a barrel and West Texas Intermediate slipped 0.05% to $75.10, after sharp swings the day before. Traders remain cautious amid mixed signals from President Trump on potential US involvement in the conflict.