Sterling Posts Worst Week in Eighteen Months — Brent Tracks Higher to $108.74 on the London Close, the OIS Curve Reaches Ninety-Three Per Cent on the May 22 Bank Cut and the Ten-Year Gilt Widens to 4.62 Per Cent as the Westminster Political Risk Premium Hardens
The pound posted its worst week against the dollar in eighteen months on the Friday close, settling at $1.2218 on cable and ending a week that has lopped two cents off the rate at which the currency opened on Monday morning. Brent crude tracked a further seventy-six cents higher to $108.74 on the London close, the IEA held its reconciled Iran-war disruption at fourteen million barrels a day for a fifth Thursday running and the OIS curve pushed the May 22 Bank of England rate decision to a 93 per cent probability of a cut. The ten-year gilt yield widened seven basis points to 4.62 per cent on the close. The Westminster political risk premium — the line the global investor community has used through the week — has hardened into a working assumption.
Cable Settles at $1.2218 on the Friday Close
The cable rate, on the close of the London session at four o’clock Friday afternoon, settled at $1.2218. The rate opened the week at $1.2415 on the Monday session. The two-cent decline on the week is the largest weekly move in the cross since the November 2024 budget. The trade-weighted sterling index, on the Bank of England’s working close of business reconciled at half past four, has lost 2.3 per cent against the basket. The euro cross, which closed Friday at €1.1612, is down a cent and a quarter on the week. The Goldman Sachs European foreign-exchange desk, in a working note circulated to clients at five, said the “UK political-risk premium has not yet fully repriced” and that the Burnham nomination route the Simons letter opens on Monday “adds a one-to-two-cent downside skew to the cable rate over the next ten sessions.”
Brent at $108.74 on the IEA Fifth Thursday
Brent crude, on the London close of the front-month contract at half past four Friday afternoon, settled at $108.74. The print is seventy-six cents higher than Thursday’s close of $107.98 and is the highest weekly close for the front month since June 2022. The IEA, on the Thursday-evening reconciliation of disruption barrels, held the daily Iran-war disruption at fourteen million barrels for a fifth Thursday running. The Strait of Hormuz has remained closed to commercial shipping for seventy-six days. The Iranian acceptance of a conditional Hormuz framework, held since the eighth of May, remains conditional and the Rome session calendared for the working week beginning May 18 will, on the State Department’s Friday-morning brief, test whether the conditional acceptance can be converted into a working reopening of the shipping lane.
The OIS Curve at Ninety-Three Per Cent
The overnight-index-swap curve, on the strip taken at half past four Friday afternoon, prices a 93 per cent probability of a Bank of England rate cut at the May 22 Monetary Policy Committee meeting. The reading is up from 91 per cent at Thursday’s close and from 76 per cent at the open of the week. The Bank of England, on the line offered by the Governor in a brief statement at three on Friday afternoon, said the Monetary Policy Committee “will take its decision in the ordinary course” and declined to comment on the Westminster political situation. The two-year gilt yield closed at 4.05 per cent, the ten-year at 4.62 per cent and the thirty-year at 5.21 per cent — the long end widening five basis points more than the short end on the day, on a curve-steepening of the kind that signals investor concern about UK fiscal sustainability rather than monetary policy alone.
The Petrol-Pump Carry-Through to the Forecourt
The RAC’s working calendar, on the Friday-afternoon update from the Foundation’s fuels editor, lands a four-pence forecourt move on unleaded by the close of next week if the Brent print holds at $108 and the Rome framework session does not produce an early Hormuz reopening. The pump price for unleaded, on the BEIS weekly retail series for the week ending Monday, May 11, stood at one hundred and sixty-five pence the litre. A four-pence move by the close of next week would put the pump at one hundred and sixty-nine. The Treasury, on the line briefed to the lobby at four, has not yet sequenced an emergency fuel-duty review against the working forecourt calendar. The Chancellor’s Monday Commons statement, scheduled for half past three on Monday afternoon, will be the next opportunity for the Treasury to set out a position.
The Working Reading of the Friday Close
The honest reading of the Friday close is that the markets have, in a single week, repriced three separate UK assets — sterling, gilts and the OIS strip — against the political risk the leadership contest opening Monday now carries, and that the global oil book has held the Iran-war disruption at fourteen million barrels for a fifth Thursday in succession. The Rome session next week is the operational pivot: an early Hormuz reopening would lift the Iran-war premium out of Brent and pull the forecourt working calendar back from the four-pence move; a Rome stall would carry the Brent print through $110 and the forecourt to the wrong side of one hundred and seventy. The Bank of England’s May 22 decision sits at the intersection of those two questions and the Westminster political question that has dominated the week.