A deal is struck.

Oil is already down significantly in Asian trading, and if the decline continues, the market should react positively. All eyes will be on the bond markets as inflationary pressures may be offset by lower energy prices. This allows the Bank of England to breathe a sigh of relief and avoid making any rushed, unpopular decisions. We could see some very positive movements in fixed-rate mortgage pricing later this week if the deal holds. Will this be enough to kickstart the UK housing market? Unlikely, only taking a hammer to stamp duty will do that.

Markets have a habit of reacting first and asking questions later. The prospect of the Strait of Hormuz reopening could push oil prices lower, easing inflation concerns and raising hopes that interest rates, swap rates and mortgage pricing may eventually improve. But that only happens if the headlines become reality. For the Bank of England, meeting this Thursday, the danger is acting on optimism that may not last. Temporary falls in energy prices do not solve long-term inflation if the underlying geopolitical risks remain.

The full impact of months with limited oil supply will be felt in almost every area of industry and the working person will pay the price.

Although it’s great news a deal will be signed on Friday, the Bank of England are unlikely to be proactive here and holding rates to how an inevitable increase to household running costs impacts inflation before making changes to the cost of borrowing.

Meanwhile the good news of a more settled and predictable market may prompt buyers and sellers in the UK to make their move

If the deal holds, we are likely to see the price of oil continue to fall, which will have a knock on impact in reducing energy prices, which in time will ease inflation. There is likely to be continued scepticism as there will be questions of whether the deal will actually happen and whether both sides will honour the terms of it.

For the UK, a deal that sticks, marginally strengthens the case for further Bank of England rate cuts, although this Thursday's rate decision is unlikely to be driven by a single geopolitical development. Swap rates could reduce, supporting lower fixed rate mortgage deals, which would help current and first time buyers.

With this being a framework agreement rather than a fully implemented peace settlement, markets are likely to retain some caution until Friday's signing and beyond.