- Pound (GBP) rises for a third straight day
- Oil prices fall on US-Iran 2-week ceasefire
- Euro (EUR) is falling but rises versus the USD
- Lower energy prices could see the ECB leave rates unchanged
The Pound-Euro (GBP/EUR) exchange rate is rising for a third straight day. The pair rose 0.01% in the previous session, settling on Tuesday at €1.1468. The pair traded between €1.1439 and €1.1480. At 20:30 UTC on Wednesday, GBP/EUR trades 0.23% at €1.1490.
The pound is rising for a third straight day against the euro and has jumped sharply against the US dollar as markets react to news of a US-Iran ceasefire.
The deal, which will pause hostilities in the Middle East for a fortnight, triggered a sharp fall in oil prices, with crude dropping around 15% to below $100 a barrel.
That has significantly improved market sentiment, as lower oil prices help ease inflation concerns and support risk-sensitive assets and currencies such as sterling.
This comes as UK housebuilders reported a sharp rise in cost inflation in March, with the Iran conflict also weighing on new orders and confidence across the sector.
According to the S&P Global Construction PMI, input cost inflation jumped to 70.5 from 59.5 in February — the biggest monthly rise since records began in 1997.
Markets will want to see oil remain below $100 a barrel if inflation fears are to ease more sustainably.
The euro is falling against the pound, but is also gaining against the US dollar, supported by the prospect of lower energy prices.
Like the UK, the eurozone is heavily reliant on imported energy, so cheaper oil helps reduce inflation pressure there too.
Markets had started to price in a possible April rate hike from the ECB. However, if the ceasefire holds, the central bank may be more inclined to keep rates on hold and assess whether the recent energy shock feeds into broader inflation.