Economic Update

April 13, 2026

Oil rises as US–Iran talks stall and markets assess the implications

Talks between the US and Iran did not progress toward a lasting agreement, prompting the US President to announce that all shipping would be prevented from entering or leaving the Strait of Hormuz. This was later clarified to apply only to vessels accessing Iranian ports. The move aims to further undermine Iran’s already fragile economy, which prompted the start of domestic protests in late 2025.

Oil prices have reacted sharply, although broader market movements remain measured. Investors appear to view this as a negotiating stance rather than a structural shift in policy. While no further talks have been scheduled, I consider additional discussions likely either later this week or early next, given the two‑week ceasefire is due to expire on April 22.

The USD strengthened modestly in response. The EUR, GBP and JPY have weakened, with the JPY edging back toward ¥160 against the USD, a development that will likely attract attention from both US and Japanese authorities.

US PPI, the Fed’s Beige Book and industrial production in focus

Last week’s US CPI release showed a slight uptick in both headline and core inflation, although the rise came in marginally below expectations. This week’s March PPI reading could follow a similar pattern, with the full impact of the conflict on energy and commodity prices not yet reflected.

The Fed’s Beige Book will provide an updated view of economic conditions. Activity and employment indicators could show further softening, while inflation pressures appear to be firming. These competing dynamics complicate the policy discussion for Fed officials assessing whether interest rates should be adjusted.

The USD is likely to be influenced more by geopolitics than domestic data in the early part of the week. Toward the end of the week, March industrial production could underperform, reinforcing concerns about global economic momentum even before the broader effect of current geopolitical tensions becomes evident.

UK jobs data shows modest improvement but living standards remain under pressure

The March REC/KPMG/S&P jobs report showed a small improvement versus February. Permanent placements increased, staff availability rose and salary pressures eased. For employers, this represents a constructive combination. For workers, wage moderation adds strain at a time when household finances already face considerable pressure.

Businesses continue to contend with elevated costs, including taxes, energy bills and inputs, which have shaped employment decisions over the past year. Retail and hospitality remain particularly exposed, with job losses and closures reported. Overnight, the Resolution Foundation warned of another year of weak or declining household disposable income.

This week’s UK data releases include February GDP, industrial production, the index of services and construction output. Consensus expectations point to a modest rise in GDP, underpinned by stronger services and industrial production. Construction is likely to remain weak, with reports indicating softer residential buyer demand, particularly among first‑time buyers and buy‑to‑let purchasers. GBP faces potential downside risks, although I expect geopolitics rather than macroeconomic data to play a more significant role in market direction.

Will the IMF signal deeper challenges for the euro area in 2026?

The IMF will release updated forecasts this week, and the outlook is unlikely to improve for the Euro Area. Downside risks have increased following the escalation of conflict in the Middle East, while the associated rise in energy costs has lifted upside risks to inflation.

The ECB remains focused on energy‑driven price pressures, which could lead them to consider a rate hike in the first half of the year, although a move at the April meeting appears unlikely given incomplete information.

EURUSD has slipped after breaking above 1.17 last week. Recent eurozone data provides little domestic support for the currency, despite Spain’s comparatively strong performance. This divergence could continue to weigh on the EUR over the medium term.

Author 

Views expressed in this commentary are those of the author, and may differ from your appointed Moneycorp representative. This commentary does not constitute financial advice. All rates are sourced from Bloomberg and forecasts are taken from Forex Factory.