London, June 20, 2026, 18:04 (BST)
- FTSE 100 slipped 0.35% to finish Friday at 10,363.27, taking its weekly loss to around 1%.
- Bank of England policymakers voted 7-2 to keep Bank Rate unchanged at 3.75%, while two members pushed for a hike to 4%.
- Traders are watching for UK flash manufacturing and services PMI at 09:30 BST on Tuesday.
FTSE books worst week in six as peace talks scrapped, political jitters hit cyclicals
British stocks fell again Friday, capping their weakest week in over a month. The FTSE 100 closed down 0.4% at about 10,363, leaving it 1% lower for the week. The FTSE 250 shed 0.6% on Friday and 0.5% over the last five sessions. Miners and other cyclicals came under pressure after U.S.-Iran peace talks were called off and new political risk emerged in the UK.
Brent crude dropped almost 5% early this week after talk of a U.S.-Iran deal. Travel, homebuilding and mining stocks rose while BP and Shell shares slipped as traders looked for cheaper energy and a possible opening of the Strait of Hormuz.
Rates were back in charge Thursday. The FTSE 100 dropped 1%, with tech shares off 3.3%. Housebuilders, often seen as rate plays, also slipped after the BoE left rates unchanged. Two members of the bank had pushed for a 0.25-point hike. “Political uncertainty is impacting investor sentiment,” said Clive Beagles at J O Hambro. Luke Bartholomew at Aberdeen said conditions for lasting inflation weren’t there. Reuters
UK inflation stuck at 2.8% in May, under the 3% forecast, gave housebuilders and banks a boost Wednesday. Barclays climbed 3.4%. Precious-metals miners rose for a fifth day but gave up most of those gains later in the week. “It’s a dilemma,” said Webull UK chief executive Nick Saunders, pointing out that solid economic data leaves the BoE room to move rates higher. Reuters
UK government borrowing jumped to £23.3 billion in May, well above the £18.5 billion forecast by economists in a Reuters poll. The gap was mainly blamed on higher costs from inflation-linked debt. Over the first two months of the financial year, total borrowing is £8.9 billion over the target set by the fiscal watchdog in March. “Several questions remain” about the government’s plans to cut borrowing, ITEM Club adviser Matt Swannell said. Reuters
Retail data beat estimates, with sales volumes up 1.2% in May. That’s more than double what economists had predicted, driven by warmer weather, clothing, and more online shopping. Pantheon Macroeconomics economist Rob Wood said consumers were “surprisingly resilient to higher energy prices.” Confidence readings, however, showed households still aren’t eager to make big-ticket buys. Reuters
Intertek was behind the week’s biggest corporate move. The testing and certification firm backed EQT’s all-cash buyout, putting a total value of £61.077 per share together with the £60 offer and final dividend. UK-listed takeover stories stayed in play, while most of the market lost ground.
London kept acting like a split market, moving with both commodity and rates trades. Oil’s drop gave a lift to banks, industrials, and airlines. As geopolitical risks came back, BP and Shell steadied the index, while miners and stocks sensitive to domestic rates dropped off. The back-and-forth looks set to stick around until there’s more clarity on energy supply and what the BoE does next.
FTSE 100 index shakeup set for Monday, with Aberdeen Group, Computacenter and Investec moving in. They take the place of Berkeley Group, Mondi and Rightmove. Investors face a busy week, with flash business surveys out Tuesday, gilt yields in focus, and attention on what’s coming out of Westminster. U.S.-Iran diplomacy could also come back into play.
Risks swing in both directions. If the Strait of Hormuz stays open, energy prices might fall, easing inflation worries and giving a lift to housebuilders and retailers, but that would hurt oil producers. More trouble in talks, or inflation expectations rising, could mean markets price in earlier rate hikes and turn up the heat on gilts and UK stocks. Schroders economist George Brown said the “bar for hikes remains high,” but also said the BoE “cannot afford to be complacent.” Reuters
