The British Pound (GBP) and Euro (EUR) are trading steadily as investors focus on two major events: the UK local elections and ongoing US-Iran peace negotiations. The EUR/GBP pair has found support around 0.8620 but remains capped below 0.8650, with market participants awaiting the outcome of UK elections involving 136 local authorities in England and the Scottish and Welsh parliaments. Forecasts suggest a significant setback for the ruling Labour Party, which could increase political uncertainty and concerns about UK fiscal stability, potentially pressuring the Pound further [1].
On the geopolitical front, Tehran is expected to respond to a US peace proposal on Thursday, which aims to end the war but leaves unresolved issues such as the status of the Strait of Hormuz. This uncertainty is keeping investor enthusiasm limited and oil prices elevated, affecting both Euro and Pound sentiment [1]. According to Reuters, Pakistan, acting as mediator, reports that both the US and Iran are close to finalizing a one-page memorandum of understanding to end the conflict [2]. Iran has confirmed that it is reviewing the US proposal [2].
Market sentiment is broadly risk-on, with optimism surrounding a potential US-Iran peace deal. S&P 500 futures are holding gains around 7,365, and the US Dollar Index (DXY) is trading cautiously near 98.00, close to its two-month low of 97.62 [2]. The GBP is trading calmly around 1.3600 against the USD, and the currency heat map shows the Pound was strongest against the Canadian Dollar today, with a 0.07% gain [2].
In the Eurozone, German Factory Orders posted a notable 5% rise in March, beating expectations of a 1% increase and following a 1.4% growth in February. However, this positive data has failed to boost the Euro, as investors remain cautious ahead of the Eurozone’s March Retail Sales release and comments from European Central Bank (ECB) policymakers regarding the bank’s tightening calendar [1].
Looking ahead, the US Nonfarm Payrolls (NFP) data for April, due Friday, is expected to be a major driver for GBP/USD, with forecasts indicating fewer jobs created, a steady jobless rate, and accelerated wage growth [2]. On the domestic front, analysts at Societe Generale expect the Bank of England to keep interest rates unchanged through 2026 [2].
CONCLUSION
Both the GBP and EUR are trading in tight ranges as markets await key political and geopolitical developments, including UK election results and a potential US-Iran peace deal. While positive German Factory Orders and risk-on sentiment provide some support, unresolved issues and political uncertainty continue to weigh on both currencies. Upcoming US NFP data and ECB policy signals are likely to drive further market moves.