CPI & Labour Market Data Drive Agenda for GBP.

Summary

• UK labour market data is released on Tuesday, followed by UK CPI for March on Wednesday, making it a significant week for sterling

• Flash PMI readings for both the US and Eurozone are due on Thursday, providing the first read on April business conditions

• UK GDP for the three months to February beat expectations, though the IMF has since cut its UK growth forecast for 2026 significantly

• The Strait of Hormuz reopened to commercial shipping on Thursday, sending oil prices lower and lifting the euro and pound as safe haven demand unwound

The dollar recorded a second consecutive weekly decline last week as the reopening of the Strait of Hormuz on Thursday eased the energy supply concerns that had supported safe haven demand over recent weeks. The euro and pound both climbed as investors unwound defensive positions, with both currencies recovering to levels last seen before the Iran conflict began. The dollar heads into this week without a clear catalyst until Thursday's flash PMI data, which will offer the first read on whether US business conditions held up in April.

Sterling enters the week with momentum behind it following the stronger than expected GDP reading for the three months to February. Tuesday's labour market figures will set the early tone, with wages and unemployment data both closely watched by the Bank of England ahead of its rate decision at the end of the month. Wednesday's CPI release for March is the bigger event, with economists expecting inflation to rise from February's reading as higher energy costs feed through. Any upside surprise could increase pressure on the MPC to act when it meets in two weeks.

The euro has largely recouped the losses triggered by the Iran conflict, recovering to pre-war levels by the end of last week as oil prices fell sharply on the Hormuz reopening. The ECB held rates at its March meeting and has not yet provided a clear steer on its intentions for its decision on 30 April. Thursday's flash PMI reading will be an important data point, offering the first indication of whether Eurozone business activity has sustained its March momentum now that energy prices are beginning to ease.

Events to Watch This Week

• Tuesday 21 April: UK Labour Market Data

• Wednesday 22 April: UK CPI Inflation (March)

• Thursday 23 April: US Flash PMI (April)

• Thursday 23 April: Eurozone Flash PMI (April)

With key data being announced across the first half of this week and three major central bank decisions to follow the week after, currency markets are entering a particularly active period. Speak to the Orbis dealing team now to ensure your upcoming transfers are protected.

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