GBP/USD + GBP/EUR Market Update

Flash PMIs in Focus as Ceasefire Holds but Hormuz Stays Shut, Thursday, 23 April 2026

GBP/USD: 1.3491 | GBP/EUR: 1.1528

Sterling opened the London session slightly softer at 1.3491 against the dollar, pulling back modestly from Wednesday's close near 1.3515, as Brent crude pushed back above $100/bbl following Iran's seizure of two container ships in the Strait of Hormuz overnight. Iran has seized ships in the Strait of Hormuz, challenging the ceasefire, and oil prices rose with global benchmark Brent crossing the $100 mark. Against the euro, GBP has edged higher to 1.1528, reflecting a marginal softening in EUR as markets await the Eurozone flash PMI data. The April flash PMIs, due this morning, will be the primary intraday catalyst and are likely to set the tone for positioning ahead of next week's MPC and ECB decisions.

Overnight & Market Tone:

The S&P 500 and Nasdaq Composite finished at record levels on Wednesday after President Trump extended the US ceasefire with Iran, with the broad market index adding 1.05% to finish at 7,137.90 and the Nasdaq adding 1.64% to settle at 24,657.57. In Asia, Japan's Nikkei 225 and South Korea's Kospi hit new highs in early Thursday trading. The positive Wall Street close is providing a mild tailwind to European equities in early trade, though the FTSE 100 is expected to open cautiously given the renewed Hormuz incident and Brent's move back through $100. The VIX stands at 18.92, down modestly on the day, while Brent Oil Futures are trading around $102.96. UK 10-year gilt yields declined to 4.86%, though they remain near multi-year highs, as investors weighed the latest Middle East developments and UK inflation data for their potential impact on the Bank of England's policy direction. The US 10-year Treasury yield was last quoted at 4.30% (FRED, 21 April), keeping the gilt-UST spread wide and underpinning the relative appeal of UK fixed income for international buyers.

UK Data & Bank of England:

Wednesday's CPI print (3.3% in March, in line with consensus) has been absorbed without drama, but the composition matters for the MPC. UK headline inflation for March rose to 3.3% from 3.0% in February, primarily due to higher petrol prices influenced by the Iran conflict. Core inflation softened to 3.1% from 3.2%, slightly below expectations, while services inflation increased to 4.5% from 4.3%. The softening in core and the energy-driven nature of the headline overshoot give the MPC cover to hold on 30 April, but the rise in services inflation will keep hawks attentive. Market participants have modestly scaled back their expectations for Bank of England rate hikes this year, now pricing in around 39 basis points of increases, still implying two hikes. The Bank held Bank Rate at 3.75% at its March meeting, noting that CPI was likely to be between 3% and 3.5% over the next couple of quarters due to higher energy prices, and that the MPC would continue to closely monitor the situation. Today's flash PMIs are the last major domestic data point before the 30 April decision: UK manufacturing flash PMI is expected to fall into contraction at 49.9, down from 51.0 a month earlier, while the services component is anticipated to drop to 50.0 from 50.5. A double miss to the downside would sharpen the growth side of the MPC's dilemma considerably.

European Backdrop:

The ECB's deposit facility rate remains at 2.00%, with the main refinancing operations rate at 2.15% and the marginal lending facility at 2.40%, following the March hold. In the ECB's baseline, headline inflation is seen to average 2.6% in 2026, revised up compared with the December projections, because energy prices will be higher owing to the war in the Middle East. Trader consensus on the ECB's April 29-30 Governing Council meeting prices a 73.5% chance of no change to the 2% deposit facility rate, reflecting the bank's March 19 decision to hold steady despite upwardly revised 2026 HICP inflation projections. A 26% hike probability stems from banks including Morgan Stanley forecasting tightening if inflation persists, with ECB President Lagarde signalling readiness for April action. For GBP/EUR, the key scenario remains: if the BoE holds and the ECB also holds on 30 April, the 175bp rate differential is preserved and GBP/EUR should remain well supported in the 1.14-1.16 range. The Eurozone flash composite PMI is anticipated to dip to 50.3 from 50.9 in March, with the services component projected to fall to 49.8, entering contraction. A weak Eurozone reading would weigh on EUR and could push GBP/EUR back toward 1.1550.

US Backdrop:

US President Donald Trump indefinitely extended the two-week ceasefire with Iran on Tuesday, just hours before it was set to expire. While the ceasefire has been extended, the US is still blockading the Strait of Hormuz and no peace talks are currently scheduled after Vice President JD Vance pulled out of meeting Iranian officials in Pakistan. The Fed's next decision is due 28-29 April; the Federal Reserve has kept rates at 4.00%, and markets have essentially ruled out any Fed cuts in 2026 given the inflationary impact of higher oil prices. US flash PMIs are also due today and, alongside the UK and Eurozone readings, will shape global risk sentiment into the weekend.

Technical Picture:

GBP/USD: Resistance 1.3515 (Wednesday's close / recent high), 1.3540 (multi-week high area per FXStreet). Support 1.3450, 1.3400.
GBP/EUR: Resistance 1.1550, 1.1600 (March peak). Support 1.1480, 1.1450 (recent range floor).
Outlook: GBP/USD has drifted marginally lower from Wednesday's close as Brent's renewed push above $100 keeps the dollar modestly bid on safe-haven grounds; a soft UK PMI print this morning would likely test the 1.3450 support, while a stronger-than-expected reading could retest 1.3515-1.3540. GBP/EUR is holding above 1.1500 and a weak Eurozone composite PMI relative to the UK reading would be the clearest near-term catalyst for a move toward 1.1550.

Today's Calendar:

The 09.30 UK flash PMI release is the single most important event for GBP today. April flash PMIs will provide valuable insight into where inflation pressures are trending as a result of the war in the Middle East, and could determine the market's positioning ahead of next week's major central bank rate decisions. Treasurers with USD or EUR payables in the next four weeks should note that a sub-50 UK composite reading would likely prompt a sharp GBP/USD sell-off and could also compress GBP/EUR if the Eurozone reading holds up better than the UK.

Outlook:

The week closes with the market in a holding pattern ahead of the 30 April triple central bank event (BoE, ECB, Fed all decide within 24 hours), and today's flash PMIs are the last meaningful data input before that window. A notable pickup in Hormuz oil flows remains unlikely in the near term, prolonging a supply crunch that has darkened the outlook for global growth. For GBP, the near-term bias is modestly to the downside on the crosses if PMIs disappoint, given that the market has already priced a significant probability of a BoE hike and any growth deterioration would erode that premium. The key upside risk for GBP/USD remains a credible signal of Hormuz reopening, which would compress Brent sharply and weaken the dollar's safe-haven bid simultaneously; the key downside risk is a double miss on UK PMIs combined with a further Hormuz incident pushing Brent materially above $105.

This commentary is provided for informational purposes only and should not be construed as investment, legal, or tax advice. Past performance is not indicative of future results. Please consult with qualified professionals before making any financial decisions. Vantry Capital Ltd is authorised and regulated by the Financial Conduct Authority.