The 14-Day Gambit: How the Iran Truce Resets GBP, EUR & USD

A surprise two-week ceasefire drives the pound to $1.34 and the euro to near 4-week-highs. As oil dives, the dollar loses its haven crown, forcing a rapid repricing of global interest rate paths.

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GBP: Sterling Seizes the Strait’s Two-Week Truce

GBPUSD 1.3431 | EURGBP 0.8704 | GBPAUD 1.9006 | BRN $94.68 per barrel

The British pound regained $1.34, rising 1.3% as the dollar weakened. This rally followed President Trump’s announcement of a two-week ceasefire with Iran, marking a major geopolitical shift. The deal emerged just before a deadline that threatened the energy supply. Brent Crude fell sharply, dropping 13.4% to $94.68 a barrel, easing stagflation pressure on the pound. Renewed risk appetite drove sterling ahead of peers in a hectic Wednesday session.

The shift rests on the reopening of the Strait of Hormuz. By securing a 14-day window for energy flows, the US has lowered the "war premium" on inflation. Britain has a strategic advantage here; its 35% energy dependency ratio is well below the EU average. Domestic renewable generation provides a buffer for growth.

Meanwhile, the Bank of England (BoE) maintains a cautious "wait-and-see" approach, with a high probability of keeping rates at 3.75% for the rest of 2026, giving the pound a floor. The cooling of energy costs allows the market to price in UK growth rather than just systemic risk. While lower energy prices ease the immediate inflation sting, the relief feels tangible, but the underlying pressures remain.

The current move for Sterling to $1.34 is a relief rally, but the two-week ceasefire window feels fragile, as short-term calm does not reset the cycle; it only pauses it.

Volatility has shifted from panic to sensitivity, causing price action to react more quickly to headlines than to data and fundamentals. When talks stall, sterling gives back gains. Historically, such shifts prompted investors to change how they manage exposure and timing; now, agility has become essential as a direct response to these changes.

Key Technical levels for the GBP/USD pair: Resistance sits at 1.3500 and Support sits at 1.3320

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EUR: Euro Hits Four-Week Peak as Energy Fears Fade

EURUSD 1.1691 | EURGBP 0.8704

The euro surged to $1.17 in today’s Asian session, hitting its highest mark since March 2026. Risk appetite flooded back into the Eurozone as traders bet on a de-escalation of the energy choke hold. The currency gained 0.8% against the dollar, buoyed by the prospect of resumed gas and fertiliser flows through the strategic Iranian waterways. In a broader timeline, the currency gained 0.14% over the past month and increased by 6.31% over the last year. Stocks in the Eurozone pointed to a strong start.

Structural support comes from the European Central Bank’s (ECB) unwavering stance. ECB President Lagarde holds a firm line, insisting policy stays restrictive until the 2% inflation target is secure. Markets now price in two or three interest rate hikes this year; the shift reflects energy-driven inflation. In further hikes anticipated for 2026, the euro possesses a high-yield floor that the dollar is currently losing. It appears that the ceasefire simply gave the hawks permission to fly.

Some analysts worry about infrastructure damage despite the ceasefire, suggesting energy prices might stay above pre-war levels. This persistent pressure forces the ECB to stay hawkish, benefiting capital attraction driven by high rates. The pound might struggle to keep up with this euro's strength in the long run, as the ECB's hawkish tone underpins the euro's strength against the pound. Today’s retail sales data could provide the next cue. If the demand weakens, the ECB faces a tighter path between inflation control and growth stability.

Key Technical levels for the EUR/GBP pair: Resistance sits at 0.8650 and Support sits at 0.8750

The euro shows resilience, and a hawkish ECB cushions the downside for the single currency. Firms with euro liabilities are facing a shifting landscape. However, the euro does not move on sentiment alone; the policy outlook still drives its medium-term direction.

Key Technical levels for the EUR/USD pair: Resistance sits at 1.750 and Support sits at 1.1600

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USD: Haven Unwinds, but Not Defeated

DXY 98.86

The dollar fell for a third consecutive day, hitting its lowest level since 11 March. The DXY index weakened to 98.83. Investors ditched the Greenback as the "safety trade" evaporated and flocked back to higher-yielding assets and equities.

The narrative for the Federal Reserve (Fed) just changed. Fed funds futures now reflect a 50/50 toss-up for a December rate cut, a massive shift from yesterday’s 74.5% certainty of a "hold." The dollar is no longer the only game in town.

The "higher for longer" narrative just hit a wall of oil. With prices dipping below $100, the Fed’s aggressive inflation-fighting mandate is under scrutiny. Governor Jefferson is cautious about labour market shocks and warns of significant headwinds, i.e., "upside risks," to inflation, but the market has pivoted toward a "peace dividend." The dollar is shedding its wartime premium as capital flows back into equities and emerging currencies.

The upcoming FOMC minutes, releasing today, will confirm if the Fed is softening its tone. Fed Goolsbee notes that the Fed must sit on its hands until it gauges the shock, since supply chain anxiety persists. The ceasefire buys time, but it does not solve the root conflict.

The dollar is vulnerable, and its status as a haven is currently acting as a liability as the world bets on peace. However, some strategists suggest dollar losses could prove short-lived and anticipate the war might resume in June. If oil stabilises above pre-war levels, inflation stays sticky, and that limits how far the dollar can fall.

Technical analysts note the dollar reacts first to risk, then resets to rates, creating two layers of movement. Short-term swings are likely to follow headlines, and medium-term direction follows policy, often leading to sharper reversals when expectations shift.

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Global Relief or a Brief Reset?

AUDUSD 0.7069 | NZDUSD 0.5836 | USDJPY 158.33 | GBPJPY 212.53

The risk-on wave hit the Pacific with force, and other currencies joined the party. The New Zealand dollar climbed 2% to $0.5843. The Aussie dollar hit $0.7069. The yen strengthened to 158.36 per dollar. The South Korean won shrugged off North Korean missile tests, rising 1.6%. Cryptocurrencies rallied, too. Bitcoin advanced toward $71,327. Gold climbed 2% to $4,812 per ounce.

The Reserve Bank of New Zealand (RBNZ) kept the official cash rate at 2.25%. The RBNZ chose to gauge the fallout from the war, standing ready to act if inflation pressures intensify. This wait-and-watch approach mirrors the global sentiment at the moment. Everyone is watching the next move in the Middle East. The pivotal test sits with the insurers and tanker operators; they must regain confidence in the Strait of Hormuz. Normal traffic flow determines if this rally stays, and without real peace, these moves are but a temporary relief bounce.

High beta currencies react fastest to sentiment shifts, but when conviction stays low, these moves often fade as quickly as they start.

Trump claimed, “This is a big day for world peace”; Iran stays silent but accepts the two-week ceasefire. Reconstruction funds are looming for the infrastructural damage, yet the conflict’s root causes remain unresolved. Hence, re-escalation risks are still on the table.

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Current Rate Table:

(as at the time of writing)

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Market Lookahead

Wed, 8 April

• Eurozone PPI (Feb), retail sales (Feb)
• NZ rate decision
• FOMC minutes

Fri, 10 April

• US CPI

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