David McNamara: Geopolitical tensions could harm the fragile global economy

Energy price falls have been helping to reduce annual consumer inflation for much of the past year, but these base effects are likely to wash through the data very soon, and could even push up inflation once more if the recent trend in oil prices persists

Brent Crude oil went on the rise after the Israel-Iran attacks. It briefly topped $90 per barrel early last week.

Last week was very much characterised by “risk-off” sentiment in markets, as rising geopolitical tensions boosted safe-haven assets. 

On the back of strong inflation and consumer spending data, the dollar’s strength has also been underpinned by escalating tensions in the Middle East, as both Iran and Israel launched retaliatory attacks on each other over the past week. Having broken through the key $1.07 support level at the end of the previous week, EUR/USD fell last week to a fresh low for 2024 of $1.06, as investors flocked to safe-haven dollar assets.