UK Stocks Flat as Strong GDP Data Offsets Strait of Hormuz Tensions

The UK's FTSE 100 index traded nearly flat on Friday, as surprisingly robust domestic economic growth data helped investors look past mounting geopolitical risks in the Middle East following an incident in the Strait of Hormuz.

As of 07:25 GMT, the benchmark FTSE 100 was down a negligible 0.03%. In contrast, mainland European markets showed modest gains, with Germany’s DAX adding 0.28% and France’s CAC 40 rising 0.55%.

Economic Strength vs. Geopolitical Risk

Providing a boost to sentiment, Britain's economy expanded by a much stronger-than-expected 0.4% in July, according to the Office for National Statistics (ONS). The data showed annual growth reaching 1.6%, its fastest pace since February 2025. ONS Director of Economic Statistics Liz McKeown attributed the performance to "ongoing strength in the services sector."

This positive domestic news was tempered by concerns over the Strait of Hormuz, a critical oil chokepoint. Iran’s Revolutionary Guard Corps claimed its navy struck a U.S. unmanned vessel in the strait. Preliminary ship-tracking data reported by Reuters showed daily transits through the strait fell to seven on Thursday, down from a 10-day average of 15, heightening fears of supply disruptions.

Market and Commodity Reaction

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In currency markets, the pound sterling firmed 0.09% against the U.S. dollar to $1.3524, supported by the upbeat GDP figures.

Despite the supply-side risks in the Middle East, oil prices retreated. Brent crude fell 2.12% to $105.35 a barrel, while WTI crude dropped 1.76% to $100.69. Analysts at ING noted that the oil market is repricing "both the duration and severity of the conflict, along with a clearer recognition of the mounting threat to regional supply."

In Company News

On the corporate front, individual company performance was mixed, with notable updates from the housing and travel sectors.

• Berkeley Group (BKGH) warned that weak homebuyer sentiment and political uncertainty are weighing on housing demand, calling for regulatory reforms.
• Trainline (TRNT) reported first-half revenue and net ticket sales that beat forecasts and announced a new £100 million share buyback program.