Currency markets again find themselves battling a situation that has changed materially over the course of the weekend. Optimism turned to bitter resignation by Monday as hopes of an end to the energy crisis were dashed by Iran’s insistence on “strict control” over the vital oil waterways.

The price of oil ended Friday near a five-week low, plummeting by more than 10% after the Iranian regime’s pledge to a full commercial reopening of the Strait of Hormuz. However, the happier tone lasted just one day, the latest in a string of false starts in efforts to stabilise the flow of trade.

Hundreds of ships remain effectively marooned in the Strait. Their cargo, which until recently transported around a fifth of the world’s oil and 40% of its jet fuel on a daily basis, is unlikely to get moving again fast, adding to inflationary pressure across the globe.

The week ahead will be heavy on geopolitics, no doubt, but a string of economic releases add to the dicey conditions. The UK reports unemployment and inflation data – sure to be closely watched after price increases held at 3% before the war had got out of first gear.

Sterling strengthened by almost a cent against the US dollar last week, at times testing its highest level since late February. The euro also performed well, which prevented the pound from making any further progress.

UK diesel and petrol prices had finally begun to fall in response to the more positive news out of the Middle East. The prospect of that continuing into the new week now looks highly uncertain.

Amid all this, Sir Keir Starmer is facing what government insiders are terming “judgment day”. The prime minister will appear in parliament today after the scandal over Peter Mandelson’s appointment as ambassador to the United States. The man at the centre of the scandal, the Foreign Office’s Sir Olly Robbins, will then give his side of the story tomorrow.

As is usually the case at times of political stress, UK gilt yields spiked in the back end of last week, a reflection of the perceived risk hanging over these shores. Yields move inversely to prices and higher yields make government borrowing more expensive.

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