Last week the Monetary Policy Committee (MPC) of the Bank of England voted to keep the base rate at 0.5%. This is due to weaker economic data for the UK, and February’s growth forecast of 1.8%, which was subsequently downgraded to 1.4%. Mark Carney is increasingly referred to as the unreliable boyfriend, not being able to keep his promises of rate rises, and has attributed the poor weather earlier in the year for this weak economic data. However, the MPC remain positive that rates will continue to rise to 1.25% by the middle of 2021. Sterling fell against the dollar after the news there would be no rate rise this month, only weeks after its high following the Brexit vote in April.

After Trump announced the US would be leaving the Iran Nuclear Deal, the price of oil jumped to over $78 a barrel, a figure not seen since 2014. In 2015, an agreement was put in place that the sanctions placed on Iran for oil production would be removed, if they halted their nuclear programme. The price of Brent Crude was pushed up as the markets anticipated how the reintroduction of sanctions would impact the 2.5m barrels a day that Iran export. The S&P 500 also experienced an increase of 2.4%, its largest weekly increase since March, with most of the return coming from the energy sector performing well as the supply of oil constricts without Iran’s exports.

But these increased returns are not limited to the US; both the UK and Europe have also seen buoyed performance because of Brent hitting its 3-year high. Forecasters are expecting to see $90 a barrel by the end of next year, with optimists even predicting $100 a barrel. Whilst the increase in cost per barrel can be beneficial for equity returns as oil companies increase their turnover, higher oil prices can lead to inflation so in turn, tighter monetary policy changes.