The UK economy nearly stalled at the start of 2026, with GDP showing little meaningful growth in January as the services sector the main engine of the economy weakened. Manufacturing and construction posted only modest gains of 0.1% and 0.2%. This raises doubts about the Bank of England’s forecast of 0.3% growth for the first quarter. Meanwhile, the Iran war and the surge in energy prices, with oil rising above $100, increase the risk of a new inflation shock and could delay interest-rate cuts. A weak labor market, higher mortgage rates, and rising fuel prices are also adding pressure on households and the broader economy

Ayatollah Mojtaba Khamenei released his first official statement, largely repeating the positions of the previous leader. He emphasized the need to keep the Strait of Hormuz closed, describing it as a key leverage point. He also stated that the enemy must compensate for the damage inflicted; otherwise, Iran would retaliate by targeting their assets in the region. There are no signs of a potential agreement, and references to the Strait of Hormuz pushed oil prices up by about $2.

As oil price volatility eased, selling pressure in global equity markets slightly moderated, though concerns over an escalation of the Iran war continue to weigh on sentiment. The MSCI All Country World Index fell about 0.3%, while Brent crude traded around $100 per barrel after a sharp rally the previous day. Investors are also assessing measures taken by the administration of Donald Trump to curb energy prices, including the release of strategic reserves and a temporary waiver allowing purchases of Russian oil. However, Iran’s threat to keep the Strait of Hormuz closed has heightened fears of global supply disruptions, prompting markets to remain cautious about inflation risks and the future policy path of the Federal Reserve.

Donald Trump called for the deployment of warships by the United States and several other countries to keep the Strait of Hormuz open so that commercial vessels can pass safely. At the same time, the US and Israel struck military facilities on Kharg Island, but Trump said oil infrastructure was deliberately spared and warned that it could become a target if Iran interferes with ship traffic through the strait. Fighting in the Persian Gulf continues, with Iran carrying out retaliatory attacks on Arab states in the region and US-linked bases. As tensions escalated, Brent crude prices rose above 100 dollars per barrel.