June was very politically significant for UK markets. Andy Burnham won a decisive victory in the Makerfield by-election. The result strengthened speculation that Andy Burnham could become Labour’s next leader. An uneasy calm has come to the Persian Gulf, pushing oil prices lower. The Bank of England (BoE) held rates in June. SpaceX completed what is widely reported to be one of the largest IPOs in history. Despite some encouraging news both at home and in the Strait of Hormuz, the months ahead remain far from straightforward.

UK Policy

The UK’s fiscal picture remains heavily defined by the BoE’s decision to hold the base rate at 3.75% in June (by a vote of 7-2). Two dissenting members called for a 0.25% rise in light of continuing price pressures at home. However, most members argued that patience was needed before making adjustments, particularly given easing energy prices and falling headline inflation.

Data largely backed up that decision. CPI inflation was 2.8% in May 2026, unchanged from April and below the consensus forecast of 3.0%. Although this is above the Bank’s 2% target, the data was reassuring for markets amid ongoing geopolitical tensions in the Middle East.

UK politics have been very eventful. Andy Burnham won the Makerfield by-election with approximately 55% of the vote, securing a majority of more than 9,000. This huge victory significantly strengthened Burnham’s position as Labour’s likely next leader, replacing Keir Starmer (who resigned as Prime Minister shortly after the result announcement). There are no formal challengers to Burnham at the time of writing.

UK financial markets have, so far, reacted with relative calm. The central concern is fiscal policy. Any incoming Prime Minister will face the same challenging public finances that Starmer’s administration dealt with. The bond markets will be those to watch, as they will focus closely on Burnham’s approach to taxation and public spending – particularly how these might interact with already elevated government borrowing costs.

UK Economy

The UK’s economic picture remained mixed in June. Recovery continues, but unevenly. Inflation was below the 3% forecast but still above the BoE’s target.

Unemployment edged slightly lower, standing at 4.9% in June. This is a modest improvement from the 5.0% recorded in the three months to March, though underlying conditions remain soft.

Annual average regular earnings growth was 5.1% for the public sector and just 2.9% for the private sector. With CPI at 2.8%, private sector workers are seeing real regular pay growth of roughly 0.1% – i.e. basically nothing.

Sadly, real wages of private sector workers have been falling since last October. And with further inflation expected over the coming months, pressures may continue to weigh on household finances.

For anyone relying on cash to preserve or grow wealth in this environment, the picture is uncomfortable: a 2.8% CPI, a personal allowance frozen at £12,570 and many easy-access savings accounts continue to offer rates below inflation. Seek financial advice to explore your savings and investment options.

UK Market

The FTSE 100 closed June near 10,497. The index had to navigate a month of political transition and fluctuating energy prices, with June defined largely by two distinct developments:

In the first half, the outcome of the Makerfield by-election remained uncertain. Also, domestically exposed stocks – housebuilders, consumer-facing names and retailers – were subdued. Energy and defence names continued to provide structural support to the index.

The picture shifted later in the month as the by-election result emerged and ceasefire progress brought oil (Brent Crude) to around $83 per barrel. Consumer and transport stocks recovered, while BP and Shell gave back some recent gains as crude fell (though both remain considerably above pre-conflict levels). The net result was a positive, if modest, month.

The FTSE 250 told a more cautious story. Miners fell as metal prices retreated, housebuilders faced additional pressure from a class-action lawsuit, and British American Tobacco announced significant workforce restructuring. The mid-cap index, more closely tied to UK domestic conditions, lagged its large-cap peer through the month.

Global Outlook

On the world stage, June was defined by the US-Iran memorandum of understanding. Iran formally agreed to “reopen” the Strait of Hormuz. The US agreed to lift its naval blockade of Iran’s ports. For now, maritime traffic remains well below pre-war norms. A full return to “normal” could take months and possibly stretch into 2027.

In the US, the Fed met in June for the first time under its new Chair, Kevin Warsh – appointed by Donald Trump following Jerome Powell’s departure. The Fed voted unanimously to hold rates unchanged, although the accompanying guidance was widely read as hawkish.

The huge stock market event in June was SpaceX’s $75 billion IPO – the largest in market history. Shares were priced at $135 and gained 19% on their first day of trading, briefly valuing the company at over $2 trillion.

However, the shares faced subsequent volatility. This was reflected across technology indices. Investors are now increasingly uncertain about whether AI-adjacent valuations are fully supported by underlying fundamentals – a question that is likely to remain live through the second half of 2026.

In both the EU and Japan, central banks moved to tighten. The ECB raised its deposit rate from 2.0% to 2.25%, while the Bank of Japan increased its rate to 1.0% – the highest level since 1995. Both banks cited ongoing inflationary pressure from the Middle East conflict. Despite the BoJ’s action, the yen continued to weaken – adding to domestic price pressures in Japan.

The content in this article was correct on 07/07/2026.

The value of your investment can go down as well as up and you may get back less than the amount invested

Your home may be repossessed if you do not keep up repayments on your mortgage

The Financial Conduct Authority does not regulate Tax Planning

You should not rely on this article to make important financial decisions. Teachers Financial Planning offers advice on savings, pensions, investments, mortgages, protection equity release and estate planning for teachers and non-teachers.

Please use the contact form below to arrange an informal chat with an advisor and see how we can help you.