UK banks jump after US-Iran ceasefire and softer inflation

Barclays, NatWest and Lloyds shares rose to multi-month highs after a 60-day US‑Iran ceasefire that included reopening the Strait of Hormuz and after the Office for National Statistics published weaker-than-expected consumer inflation. Investors were also awaiting the Bank of England interest rate decision due later today.

The ceasefire agreement provides sanctions and monetary relief for Iran and coincided with a sharp fall in crude oil prices. Brent and WTI benchmarks traded below $80 per barrel following the announcement. Shipping and fertiliser costs have eased, and market participants linked these changes to improved sentiment for UK bank stocks.

NatWest shares climbed to 638p, their highest level since February 9 and about 26% above the March low. Lloyds reached 105.80p, its strongest since February, while Barclays rose to 503p, roughly 40% higher than its lowest price this year.

The ONS reported headline consumer price inflation at 2.8% and core CPI at 2.6%, both below market forecasts. The data reduced near-term inflation pressure in the view of traders and became a factor in the market moves earlier in the day.

Economists widely expect the Bank of England to leave its policy rate at 3.75% in its announcement later today. Market indicators on prediction platforms put the probability of a BoE rate increase at about 58% at some point this year. A higher Bank rate would widen the gap between lending and deposit rates and tend to raise banks’ net interest income.

Recent quarterly results for the lenders showed rising income. Barclays reported Q1 income of £8.2 billion, up 6% year‑on‑year, with UK income and its investment banking division up 9% and 6% respectively, and the bank has resumed share buybacks. Lloyds recorded statutory profit before tax of £2.0 billion, up from £1.5 billion a year earlier, and underlying net interest income rose 8% to £3.6 billion. NatWest reported net interest income of £3.39 billion, up from £3.026 billion a year earlier.

Investors will watch the Bank of England’s statement for guidance on future rate moves and monitor whether the US‑Iran agreement holds beyond the 60‑day term. Oil, shipping and commodity prices will remain focal points for assessing the economic backdrop for UK lenders.