GBP/USD + GBP/EUR Market Update

PMI Beats Sharpen MPC Hike Debate as Brent Surges Past $105, Friday, 24 April 2026

GBP/USD: 1.3467 | GBP/EUR: 1.1528

Sterling opened Friday's London session at 1.3467 against the dollar, softer than Thursday's intraday highs as a fresh leg higher in Brent crude - international benchmark Brent pared gains to climb 0.63% to $105.73 per barrel in Friday trading - reinforced the stagflationary narrative that has dominated GBP pricing all week. Against the euro, GBP/EUR holds at 1.1528, broadly unchanged on the week, as the divergence between a resilient UK activity picture and a deteriorating eurozone PMI backdrop provides a modest offset. The key domestic focus today shifts to the UK retail sales print at 7.00am, with the broader market narrative firmly anchored to next week's triple central bank event.

Overnight and Market Tone:

Risk appetite remains fragile heading into the weekend. The FTSE 100 fell more than 0.4% on Thursday, marking a fourth straight decline as tensions between the US and Iran persisted and oil prices moved higher; the two sides failed to hold a new round of peace talks and remain locked in a dispute over control of the Strait of Hormuz. 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. 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 eurozone composite PMI slumped to a 62-month low of 47.4 in April (from 50.2 in March), providing a counterweight to sterling weakness and helping to keep GBP/EUR supported near 1.1528.

UK Data and Bank of England:

Thursday's flash PMI data delivered a significant upside surprise. The S&P Global UK Composite PMI rose to 52.0 in April 2026 from 50.3 in March, significantly exceeding market expectations of 49.8 and signalling renewed strength in UK private-sector output. The manufacturing PMI rose to 53.6 from 51.0 in March, while the services PMI rose to 52.0 in April from 50.5 in the prior month, surpassing market forecasts of 50.0. The detail, however, is less reassuring for the inflation outlook: S&P Global notes that its gauge of input prices in this month showed the biggest monthly increase since records began 28 years ago. New orders recorded a slight decline, highlighting continued fragility in demand amid rising global uncertainty and mounting inflationary pressures linked to the ongoing conflict in the Middle East; employment levels also continued to fall; and inflationary pressures intensified sharply, driven mainly by higher fuel costs. Employment fell for the 19th consecutive month, with firms citing higher National Insurance contributions as a key factor behind staff reductions. The MPC meets on 30 April with Bank Rate at 3.75%. All 62 economists in a Reuters poll expected the Bank of England to hold interest rates at 3.75% on 30 April. However, Ben Zaranko, a director at the Institute for Fiscal Studies, said an interest rate rise above 4% from its current rate of 3.75% could not be ruled out, given markets had all but dismissed the possibility of a cut this month. The MPC's own March minutes noted that a larger or more protracted shock, which risked greater second-round effects in wage and price setting, would require a more restrictive policy stance. Yesterday's record input price reading will sharpen that internal debate considerably. UK March retail sales (ONS, 7.00am today) are the final significant domestic data point before the blackout period.

European Backdrop:

The ECB's Governing Council meets on 29-30 April, the same week as the MPC and the FOMC. The ECB's deposit facility rate currently stands at 2.00%. 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 to 2.6% from energy shocks tied to Middle East tensions. March eurozone inflation surged to 2.5%, above the 2% target, driven by soaring oil prices, yet core pressures remain contained around 2.3%, supporting a pause; a 26% hike probability stems from banks including Morgan Stanley forecasting tightening if inflation persists, with ECB President Lagarde signalling readiness for April action. The eurozone composite PMI's collapse to 47.4 in April - a 62-month low - with the fall in output broad-based across the region, with Germany recording its first decrease in business activity in 11 months and France falling at the sharpest pace since February 2025 - materially reduces the probability of an ECB hike and is the primary reason GBP/EUR has held firm this week despite sterling's broader softness. A hold from the ECB on 30 April, combined with any hawkish signal from the MPC, would provide the clearest near-term catalyst for a GBP/EUR move towards 1.16.

US Backdrop:

The FOMC meets on 28-29 April. FOMC participants generally observed that overall inflation remained above the Committee's 2% longer-run goal, with some noting that further progress in reducing inflation had been absent in recent months. The IMF cautioned in its April Article IV consultation that there is little room for the Fed to cut interest rates in 2026, particularly given the rise in energy prices, the likely passthrough to core inflation, and the upside risks to global commodity prices. A hold from the Fed next Wednesday is the near-universal expectation, and the dollar's behaviour will be driven primarily by the tone of Chair Powell's press conference and any guidance on the energy shock's persistence. US Q1 GDP (advance estimate) is due today at 1.30pm London time and represents the most significant USD event of the session.

Technical Picture:

GBP/USD: Resistance 1.3491 (Thursday's open/Wednesday close), then 1.3515 (Wednesday's session high). Support 1.3440 (this week's intraday low), then 1.3400 (round number and April mid-month pivot).
GBP/EUR: Resistance 1.1560 (19 March 2026 area), then 1.1597 (2026 year-to-date high, per exchange rate data). Support 1.1490 (mid-week consolidation), then 1.1450 (early April low).
Outlook: GBP/USD remains in a consolidation range between 1.3400 and 1.3520 ahead of next week's triple central bank event; a sustained break above 1.3520 requires either a hawkish MPC surprise or a meaningful de-escalation in the Strait of Hormuz. GBP/EUR's near-term bias is modestly to the upside given the eurozone PMI deterioration, but the range is likely to hold until 30 April.

Today's Calendar:

The US advance Q1 GDP print at 1.30pm is the single most market-moving event of the session for GBP/USD: a materially weaker-than-expected reading would reinforce dollar softness and could push GBP/USD back towards 1.3490-1.3515, while a beat - particularly if accompanied by a hot core PCE reading - would strengthen the case for the Fed to hold rates for longer and could weigh on risk appetite broadly. UK retail sales at 7.00am will set the early tone for sterling; given yesterday's PMI upside, a further positive surprise would add to the nascent hawkish MPC repricing.

Outlook:

The week closes with sterling in a more complex position than it entered: the PMI beats have improved the UK's relative growth story versus the eurozone, but record input price inflation simultaneously makes the MPC's path harder to read, and the renewed surge in Brent above $105/bbl removes any near-term comfort on the energy shock abating. Treasurers with USD payables due before 30 April should note that GBP/USD at current levels remains historically favourable relative to the year-to-date range, and the triple central bank week carries genuine two-way risk of 1-2 cent moves in either direction. Those with transfers to execute before end of April should consider acting before 30 April to avoid the central bank triple event. The key risk scenario to monitor over the weekend is any development in the Strait of Hormuz: even if a lasting deal to reopen the Strait of Hormuz emerges, analysts say it could take months for oil shipments to return to normal levels and for fuel prices to go down.

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.