Flash PMIs in Focus as Markets Brace for Growth Slowdown Ahead of ECB and BoE Decisions

Key Highlight

• Early April business activity data (flash PMIs) will provide the first real indication of how rising geopolitical tensions and elevated energy prices are impacting growth across major economies.

• With both the European Central Bank and Bank of England meeting next week, today’s data is likely to shape expectations for upcoming rate decisions.

Market Recap

The US dollar initially softened on optimism around a potential ceasefire in the Middle East, but those losses were reversed after renewed tensions in the Strait of Hormuz unsettled markets.

Additional support for the dollar emerged later in the session, as US Treasury Secretary Scott Bessent highlighted increased demand for US dollar liquidity via FX swap lines from Gulf and Asian nations. This reflects how geopolitical developments are influencing global currency demand. Supporting this trend, recent SWIFT data showed the dollar’s share of global trade transactions climbed to a record 51.1% in March.

In Europe, EUR came under pressure after comments from ECB policymaker Yannis Stournaras suggested a more cautious approach to rate hikes, signalling the central bank may delay tightening if geopolitical risks ease. This softer tone surprised markets and weighed on the euro, making it one of the weakest performers among major currencies.

GBP, meanwhile, found limited support from UK inflation data. Headline CPI met expectations at 3.3%, while core inflation came in slightly lower. This reinforces the view that the Bank of England may remain patient on rate hikes, leaving sterling more sensitive to broader market sentiment and global risk trends.

Market Update

Focus today turns to flash PMI data across the major economies.

• Eurozone: Activity is expected to slow, with the composite PMI forecast to fall to 50.0. A weaker reading, particularly if services slip into contraction, could reinforce the recent dovish shift from ECB officials and add further downside pressure on the euro ahead of next week’s meeting.

• UK: The composite PMI is also expected to dip into contraction territory. Combined with persistent energy-driven inflation, this may strengthen concerns around stagflation and could weigh on GBP in the near term.

• US: In contrast, US data is expected to remain relatively resilient, with both composite and manufacturing PMIs holding above the 50 mark. If confirmed, this would reinforce the divergence between the US and other major economies, potentially supporting the dollar into the latter part of the week.

Markets will also be paying close attention to any signs of rising input costs linked to energy prices, as this could influence the policy outlook for both the ECB and Bank of England in the days ahead.

23rd April 2026

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