Monthly Currency Report Summary – April 2026
Overview
April 2026 was dominated by geopolitical uncertainty, oil price volatility and a shifting monetary policy outlook. The conflict involving Iran, the Strait of Hormuz and US intervention remained the main driver of market sentiment throughout the month. FX markets were highly reactive to headlines, with traders repeatedly moving between risk-off positioning and short-lived optimism whenever peace talks appeared to make progress.
The US Dollar remained closely linked to safe-haven demand. When tensions escalated in the Middle East, the Greenback strengthened as investors moved toward defensive assets. When peace talks appeared more constructive, or when oil prices eased, USD demand softened and both Sterling and the Euro recovered. This stop-start pattern created a choppy month across GBP/USD and EUR/USD, with neither pair able to establish a clean directional trend for long.
Sterling was heavily influenced by the market’s changing view of Bank of England policy. At the start of the month, traders were still assessing whether the BoE might need to respond to weak growth and softer inflation with rate cuts. However, as oil prices remained elevated and inflation risks resurfaced, the market began to consider whether the Bank may need to remain more cautious. This supported GBP at points, especially when the pair recovered above 1.3400 and later tested the 1.3500 to 1.3600 area. Even so, Sterling’s upside remained limited by domestic growth concerns, political uncertainty and the broader strength of the Dollar during risk-off periods.
The Euro faced similar pressure but with an additional layer of concern around energy exposure. The Eurozone is particularly sensitive to oil supply and energy price shocks, which meant EUR/USD frequently came under pressure when the Iran situation worsened. However, the Euro also found support when markets expected the ECB to remain cautious on inflation. As a result, EUR/USD spent much of the month moving around the 1.1500 to 1.1800 range, with repeated tests of the 200-day moving average.
GBP/EUR remained relatively contained compared with the two Dollar pairs. The cross spent much of the month around 1.1450 to 1.1550, occasionally pushing higher when Sterling recovered more strongly than the Euro, but struggling to break decisively above resistance. The pair was mostly driven by relative performance against the Dollar, rather than a clear independent trend.
By the end of April, markets remained cautious. The key question was whether the Middle East conflict would continue to dominate sentiment, or whether traders could shift focus back toward central banks, inflation and growth data in May.
GBP/USD
GBP/USD had a volatile month, moving between sharp risk-off declines and strong recovery attempts as traders reacted to changing headlines from the Middle East. The pair began April under pressure after renewed uncertainty around US involvement in the region drove demand for the Dollar. Sterling fell below 1.3200 early in the month as safe-haven flows supported the Greenback and liquidity thinned around the Easter bank holiday.
The early-month weakness came after markets reassessed Trump’s comments on the Middle East. Initial optimism around a potential US withdrawal gave way to uncertainty, and the Cable struggled to build on its recovery attempts. The pair initially looked for a move toward 1.3300 after oil prices eased, but risk aversion quickly returned and pushed GBP/USD back below its short-term moving averages.
As the month progressed, the situation became more two-sided. The pair found support around the low 1.3200s and then recovered as markets responded positively to signs of peace talks and a possible reopening of the Strait of Hormuz. Falling oil prices reduced some of the inflation pressure that had supported USD demand, allowing Sterling to recover above 1.3300 and then test 1.3400.
The strongest recovery came in the middle of the month. GBP/USD moved back above the 200-day moving average and gained momentum after optimism grew around diplomatic progress. The pair pushed through 1.3400 and later reached the 1.3500 area, with traders increasingly reassessing the risk of aggressive BoE action. UK economic growth data also offered some support, although this was not strong enough to remove wider concerns about the UK outlook.
The Bank of England was a major influence. Markets had moved between expectations of cuts and concerns about possible future hikes, depending on how energy-driven inflation risks were interpreted. The BoE held rates at 3.75%, and the tone around inflation was more cautious than previously expected. Higher oil prices and the risk of imported inflation made it harder for traders to assume a clear easing path. This helped Sterling at times, particularly when markets began to price out near-term cuts.
However, GBP/USD repeatedly struggled to hold gains above 1.3500. Even when the pair reached 1.3575 and showed signs of a possible bullish push toward 1.3600, traders became cautious ahead of Fed and BoE announcements. RSI readings also suggested that upside momentum was becoming stretched, limiting the willingness to chase the move higher.
Toward the end of April, the pair softened again as the Fed held rates at 3.75% and the market was underwhelmed by the narrative that followed. GBP/USD fell back below the 20-day moving average and remained below 1.3500. Traders then shifted attention to the BoE’s press conference, where a dovish tone was widely expected despite rates also being forecast to remain unchanged at 3.75%.
Overall, Cable ended April without a decisive breakout. The pair recovered well from early-month lows below 1.3200 but was unable to establish a stable move beyond 1.3500 to 1.3600. The month showed that Sterling can benefit when Middle East tensions ease and oil prices fall, but it remains vulnerable when risk aversion returns and USD safe-haven demand strengthens.
EUR/USD
EUR/USD also spent April trading around geopolitical headlines and oil price movements. The pair began the month under pressure as safe-haven demand lifted the Dollar and the Euro was weighed down by concerns over energy supply. EUR/USD fell toward 1.1500 early in the month after the Dollar strengthened on renewed Middle East uncertainty.
At the start of April, traders were focused less on Eurozone data and more on the impact of oil prices and conflict risk. The Euro’s direct exposure to energy markets meant that rising oil prices quickly became a key pressure point. Even when EUR/USD attempted to recover above 1.1600, moves were often short-lived because investors remained cautious ahead of Trump’s statements and further developments around Iran.
The first significant improvement came after signs of a possible ceasefire and peace talks. As oil prices eased and the Dollar lost some of its safe-haven support, EUR/USD recovered strongly. The pair moved back above 1.1600 and later tested 1.1700. At times, it also managed to trade above its 200-day moving average, suggesting that a more constructive trend could form if geopolitical pressures eased.
However, the pair continued to face resistance. Moves above 1.1700 were regularly challenged by uncertainty around the sustainability of peace talks. Traders were reluctant to assume that the conflict was close to resolution, especially when new demands or unclear signals from the US caused renewed volatility. This kept EUR/USD in a reactive rather than directional trading pattern.
Mid-month, the pair gained further support from softer US data and expectations that the Fed could still cut rates later in the year if inflation improved. EUR/USD approached 1.1800 as markets responded positively to better inflation signals and reduced USD demand. The pair benefited from broad Greenback weakness, but the rally was not purely Euro-led. Much of the move reflected lower safe-haven demand for USD rather than a decisive improvement in Eurozone fundamentals.
The European Central Bank also influenced sentiment. Traders focused on whether the ECB would become more hawkish in response to energy-driven inflation. While rates were held at 2.15%, the following narrative suggested policymakers were taking inflation risks seriously. This helped support the Euro on dips, especially when markets considered the possibility that the ECB may need to remain cautious if energy prices stayed elevated.
Despite this, EUR/USD struggled to hold above 1.1800. German service sector weakness and wider concerns about Eurozone energy exposure capped upside. In the final week, the pair slipped back below 1.1750 and then toward 1.1700 as risk aversion returned ahead of the Fed and ECB announcements. By the end of the month, EUR/USD had fallen below 1.1670, with the 200-day moving average again becoming a key level to watch.
Overall, April was a month of recovery attempts but limited follow-through for EUR/USD. The pair remained supported when oil prices eased and USD demand softened, but it could not escape the influence of geopolitical uncertainty. The 1.1500 to 1.1800 range captured most of the month’s trading conditions, with the Euro unable to build a sustained move beyond the upper end of that band.
GBP/EUR
GBP/EUR was more stable than either GBP/USD or EUR/USD, but it still experienced several important shifts throughout April. The pair spent most of the month between 1.1450 and 1.1550, with brief moves above 1.1550 when Sterling outperformed the Euro.
At the beginning of the month, GBP/EUR traded around 1.1450 as both Sterling and the Euro came under pressure against the Dollar. Because both currencies were being driven by the same external force, namely USD safe-haven demand, the cross did not move as dramatically as the Dollar pairs. However, the Euro appeared more exposed to the energy shock, which allowed Sterling to recover some ground at times.
As the month progressed, GBP/EUR pushed toward 1.1500 and then into the mid-1.15s. The pair benefited when GBP/USD recovered more strongly than EUR/USD, particularly during periods when traders viewed the UK as slightly less exposed than the Eurozone to energy supply disruption. A steeper Euro decline against the Dollar also helped the cross.
The clearest move higher came when Sterling gained from improved confidence around the BoE’s inflation stance, while the Euro remained weighed down by energy risks and weaker German data. GBP/EUR reached around 1.1540 to 1.1550 and later tested levels near 1.1560. However, the pair repeatedly struggled to build a clear breakout above that area.
Technical resistance remained important. The pair was often supported by the 200-day moving average, but RSI readings showed limited room for sustained upside. This meant that even when Sterling had the stronger session, traders were reluctant to push the cross much higher without a clear policy signal from the BoE.
By the end of the month, GBP/EUR remained supported near 1.1550 but had not established a convincing trend. The pair’s direction continued to depend on relative moves in GBP/USD and EUR/USD rather than independent UK or Eurozone data. If Middle East tensions worsen, the cross may remain volatile but contained. If tensions ease, attention may return to BoE and ECB policy differences.
Key Market Influences
The most important driver in April was the conflict involving Iran and the Strait of Hormuz. Any signs of escalation supported the Dollar and weighed on both Sterling and the Euro. Any sign of diplomacy or lower oil prices weakened the Dollar and allowed both pairs to recover.
Oil prices were the second major factor. Higher prices raised fears of imported inflation in the UK and Eurozone, complicating the outlook for both the BoE and ECB. This reduced confidence in near-term rate cuts and encouraged traders to focus more on inflation risk than growth weakness.
Central banks were also critical. The Fed held rates at 3.75%, while traders waited for signs of how it would respond to weaker data and geopolitical inflation. The BoE also held rates at 3.75%, but markets were focused on whether Andrew Bailey would sound dovish or cautious. The ECB held rates at 2.15%, with markets watching closely for any hint that policymakers may need to respond to energy-driven inflation.
Technical levels also shaped trading. GBP/USD repeatedly reacted to 1.3200, 1.3400, 1.3500 and 1.3600. EUR/USD was driven by 1.1500, 1.1700 and 1.1800. GBP/EUR remained focused on 1.1450, 1.1500 and 1.1550.
Outlook for May 2026
May begins with FX markets still cautious and headline-sensitive. GBP/USD needs to hold above 1.3400 to preserve its recovery, while a move above 1.3600 would require either a dovish Fed shift or a calmer geopolitical backdrop. EUR/USD remains vulnerable if it breaks below the 200-day moving average, but a return above 1.1750 could restore confidence. GBP/EUR is likely to remain range-bound unless the BoE or ECB gives traders a clear policy signal.
If tensions in the Middle East continue, safe-haven Dollar demand may remain the main driver. If diplomacy improves and oil prices fall, markets may return to central bank policy and inflation data as the key sources of direction.