27th February 2026

UK markets continued their strong momentum this week, with the FTSE 100 Index rising 2.1% to trade at 10,900 points at the time of writing.

UK consumer confidence has reversed the gains of the past two months amid rising unemployment, raising questions about whether a recent improvement in economic indicators will continue. The GfK consumer confidence index, a measure of how people view their personal finances and broader economic prospects, dropped by three points in February to minus 19. Economists polled by Reuters had expected the indicator to climb for the third month in a row to a one-and-a-half year high of minus 15.

The fall in consumer confidence, which is closely monitored as an indication of future consumer spending, contrasts with other indicators pointing to improvements in the UK economy at the start of the year. In February, the S&P Global Purchasing managers’ index signalled the fastest rate of growth in the private sector since April 2024. In January, the public sector registered a record budget surplus and retail sales rose sharply.

Neil Bellamy, consumer insights director at GfK, partly blamed the fall in consumer confidence on the rise in unemployment. The decline in confidence will disappoint many economists who had expected lower inflation and mortgage interest rates to help improve sentiment and household consumption.

UK consumer spending has been weak since the Covid-19 pandemic, reflecting elevated borrowing costs and inflation, limiting economic growth. UK inflation declined to 3% in January, and the Bank of England expects it to fall close to its 2% target in April. The Nationwide house price index rebounded in January as the Budget uncertainty about property taxation waned.

Elsewhere, Sterling fell below $1.35 on Friday, as investors reacted to the outcome of a key district election and its implications for Prime Minister, Keir Starmer. The ruling UK Labour Party lost Gorton and Denton, near Manchester, a seat it had comfortably held in the 2024 general election, with the Green Party taking first place and Labour finishing third behind Reform UK. The defeat intensifies uncertainty over the positions of Starmer and Chancellor Rachel Reeves, amid fears they could be replaced by ministers advocating higher fiscal spending, further straining the UK’s public finances.

Commodity markets

In the commodity markets, Brent crude futures traded around $72 per barrel on Friday and are set for a weekly rise, as investors assessed the impact of US-Iran nuclear talks on tensions in the Middle East.

The United States and Iran held indirect talks in Geneva on Thursday after US President Donald Trump ordered a military build-up in the region.

Oil prices made gains during the talks on media reports indicating that discussions had stalled over US insistence on zero enrichment of uranium by Iran. However, prices eased after the Omani mediator said the two sides had made progress in the talks. They plan to resume negotiations with technical-level discussions scheduled next week in Vienna. President Trump said on February 19th that Iran must make a deal over its nuclear programme within 10 to 15 days, or “really bad things” will happen.

Geopolitical risk premiums of $8 to $10 a barrel have been built into oil prices on fears that a conflict will disrupt Middle East supply through the strait of Hormuz, where about 20% of global oil supply passes. To cushion the impact from a possible strike, Saudi Arabia is increasing oil production and exports, two sources familiar with the plans told Reuters.

Meanwhile, the producer group OPEC+ is likely to consider raising oil output by 137,000 barrels per day for April at its March 1st meeting, sources said, after suspending production increases in the first quarter.

Gold prices traded around $5,190 an ounce on Friday and are set for a weekly rise as uncertainty over US tariff policies and tensions between the US and Iran boosted the metal’s safe-haven appeal.

Equity markets

US equity futures fell on Friday, extending losses from the previous session’s losses as software and other technology names remained under pressure. In Thursday’s regular trading session, the Dow Jones Industrial Average rose 0.03%, the S&P 500 lost 0.54%, whilst the Nasdaq Composite declined 1.18%.

The benchmark US mortgage rate has dropped below 6% for the first time in more than three years, potentially offering relief to borrowers and likely bolstering President Trump’s claim that housing is becoming more affordable under his administration. The 30-year rate averaged 5.98% as of Thursday, bringing it to its lowest level since September 2022, government-backed housing entity Freddie Mac reported.

Housing affordability has become a pressing political issue for the White House in the run-up to November’s midterm elections. US housing market activity has been weak since the Federal Reserve began lifting borrowing costs in 2022 to tame inflation, which had reached historic highs following the Covid-19 pandemic. Mortgage rates hit a 23-year high of about 7.8% in October 2023.

Since his second inauguration, Trump has been putting pressure on the Federal Reserve to bring down its benchmark interest rate. Last month, he directed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities with the aim of further lowing borrowing costs.

Elsewhere, the number of Americans filing new applications for jobless benefits increased by 4,000 to 212,000 last week and the unemployment rate appeared to hold steady at 4.28% in February amid a stable labour market. The weekly jobless claims report from the Labor Department suggested that the US labour market remains in a “low-hire, low-fire” state, and supports economists’ expectations that the Federal Reserve will not cut interest rates before Federal Reserve Chair Jerome Powell’s term ends in May.