The EUR/GBP currency pair traded flat on Wednesday, stabilizing around 0.8635 after earlier gains were trimmed due to renewed volatility stemming from geopolitical headlines about a potential US-Iran peace deal [1]. The Euro initially strengthened following an Axios report suggesting that Washington and Tehran are moving closer to an agreement aimed at ending the war and establishing a framework for detailed nuclear negotiations. However, these gains were short-lived as uncertainty persisted, with US President Donald Trump warning that military action could resume if Iran does not agree to the deal [1]. Iran’s Foreign Ministry spokesperson stated that Tehran is reviewing the latest US proposal and will respond via Pakistan, while also dismissing parts of the Axios report as 'speculation' and describing the US demands as 'ambitious and unrealistic' [1].
In the UK, the British Pound struggled to gain traction ahead of Thursday’s municipal elections, with speculation about Prime Minister Keir Starmer’s position and polls indicating the Labour Party could face a significant setback. This political uncertainty helped limit downside in EUR/GBP, keeping the pair range-bound near recent lows [1].
Market participants also digested the latest Services Purchasing Managers Index (PMI) data. The UK’s S&P Global Services PMI was revised up to 52.7 in April from a preliminary 52.0 and March’s 11-month low of 50.5. The UK Composite PMI improved to 52.6 from 50.3, beating both the flash estimate of 52.0 and market expectations of 49.8 [1]. In contrast, the Eurozone’s S&P Global Services PMI was revised up slightly to 47.6 in April from 47.4, but this was still a sharp drop from 50.2 in March. The Eurozone Composite PMI also fell to 48.8 from 50.7, despite a minor upward revision from the preliminary estimate of 48.6 [1].
On the day, the British Pound was the strongest against the Canadian Dollar, while it was little changed against the Euro, reflecting the overall range-bound nature of EUR/GBP [1].
CONCLUSION
EUR/GBP remained stable as markets weighed UK political risks and ongoing US-Iran diplomatic efforts. Mixed PMI data from both the UK and Eurozone, along with political uncertainty in Britain, contributed to the pair’s range-bound movement. The market is likely to remain cautious until there is greater clarity on both the geopolitical and domestic political fronts.