Global FX markets are treading carefully as the Iran conflict and the looming Strait of Hormuz deadline take centre stage, keeping traders in a holding pattern ahead of what could be a binary outcome. A lasting de-escalation could prompt dollar weakness and a brief risk-on rally, while further military escalation would likely drive safe-haven dollar demand and weigh on equities. US CPI data later this week is the key scheduled release to watch.
Read detailed market reports below.
Current FX rates: 7 April 2026
| Currency pair | Rate |
|---|---|
| gbp usd | 1.3243 |
| eur usd | 1.1552 |
| gbp eur | 1.1464 |
Rates correct as of 11:45pm on Tuesday 7 April but may now have changed.
The Big 3
A deeper look at the performance of major currency pairs this week. Become a subscriber to receive the full reports.
Middle East tensions keep sterling in limbo
With markets on edge ahead of a Trump-imposed deadline for Iran to reopen the Strait of Hormuz, GBP/USD has been consolidating into the Easter break. FX traders are braced for a binary outcome: a partial de-escalation that weighs on the dollar, or a military escalation that would lift it alongside oil prices and hit equities. Sterling is caught between two opposing forces. Risk-off pressure is pulling GBP/USD lower, while a relatively hawkish Bank of England, with scope for two rate hikes in 2026, is lending some support. That said, scepticism remains over whether those hikes will materialise.
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EUR/USD caught between geopolitical risk and rate divergence
EUR/USD is rangebound as markets weigh up conflict-driven dollar support against the prospect of a de-escalation rally. Trump’s unpredictable messaging is keeping traders cautious, with US inflation data the key release this week. The euro has a tailwind from a more hawkish ECB, with a rate hike at the April 30th meeting now possible. That contrasts with a more patient Fed, tilting EUR/USD risks to the upside. But any military escalation around the Strait of Hormuz could quickly reverse that with a wave of safe-haven dollar buying.
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Euro retains the upper hand over sterling
GBP/EUR has continued to drift lower as markets scale back expectations for BoE rate hikes, with Governor Bailey cooling sentiment by warning that pricing had got ahead of itself. The ECB, by contrast, looks increasingly likely to move first, with an April hike now a real possibility. Sterling’s sensitivity to risk-off conditions has added to the pressure, leaving it vulnerable while Middle East tensions remain unresolved. With little scheduled data on either side this week, geopolitical developments will continue to call the shots, and the path of least resistance for GBP/EUR looks to be modestly lower.
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Looking forward
Key dates for your calendar.
- Tuesday: Eurozone Services PMI. US Durable Goods.
- Wednesday: Euro-area Retail Sales & PPI.
- Thursday: US GDP (Final Q4), PCE Price Index and Personal Income & Spending
- Friday: US CPI (March) and Michigan Consumer Sentiment. China PPI & CPI.
What we’re talking to our clients about
IFX Payments is service led. Here are some of the conversations we’re having:
- Trump/Iran
- Q2 planning and forecasting
The contents of this article do not constitute financial advice and are provided for general information purposes only. While the content is based on information believed to be accurate at the time of publication, no guarantee is provided.