What is the right course of action?

You answered correctly. When turning left at a junction, you must allow oncoming cyclists who are going straight to pass before you turn, because they have the right of way. Even if you have priority, you should not block the junction, so you may need to forgo your right of way to ensure traffic flows smoothly. This prevents dangerous situations and keeps the crossing area clear. In summary, you should always look out for cyclists going straight and give them priority, and never block junctions by insisting on your turn.