Last week was another clear reminder that, for now, geopolitics is firmly in the driving seat.
Early in the week, markets reacted positively to news that Donald Trump would enter negotiations with Iran, with a ceasefire announced shortly after. On paper, this should have brought some stability.
In reality, it didn’t take long for cracks to appear.
Reports throughout the week suggested that the ceasefire was not being consistently observed, and by the weekend, confidence had already started to fade. JD Vance travelled to Pakistan in an attempt to push negotiations forward, but talks ultimately broke down, with Iran rejecting what was described as the US’ “final and best offer.”
One of the key sticking points remains Iran’s demand for a broader ceasefire involving Israel and Lebanon. With continued attacks reported over the weekend, it’s difficult to see how a meaningful resolution is reached in the immediate term.
A Market Learning to Live With Uncertainty
What’s interesting now is not just the headlines themselves, but how markets are reacting to them.
Earlier in the conflict, any sign of escalation or de-escalation triggered sharp moves across currencies, equities and commodities. Now, there’s a sense that markets are beginning to adjust — not because the situation is resolved, but because participants are starting to accept that it may drag on.
In other words, we may be entering a phase where markets are no longer pricing in a quick resolution, but instead trying to function alongside ongoing geopolitical risk.
That doesn’t remove volatility. If anything, it just changes its nature.
Further escalation would likely see:
- Oil prices move higher again
- Inflation pressures remain elevated
- Risk appetite weaken
Whereas genuine progress in negotiations could quickly reverse that tone, particularly in currencies and equities.
For now though, direction remains uncertain, and sentiment fragile.
A Quiet Data Week – But Still Relevant
Away from geopolitics, the economic calendar is relatively light.
Monday and Friday are both quiet, leaving most of the focus on a handful of midweek releases.
On Tuesday, US Producer Price Index (PPI) is expected to come in at 4.6%. With energy markets still sensitive to geopolitical developments, there is a risk that inflation pressures remain stubbornly high, which would likely feed through into CPI over time.
Wednesday brings Eurozone industrial production, expected at 0.3%. However, given this reflects February data, it is unlikely to carry much weight in the current environment.
Thursday is the most meaningful day of the week.
UK GDP is expected at 0.1%, a modest improvement from the previous reading of 0%. While not particularly strong, it could offer some short-term support to sterling.
We also have Eurozone CPI at 2.5%, followed by ECB minutes, which may give further insight into whether policymakers are leaning towards holding rates or considering future hikes.
In the US, jobless claims are expected at 214k, slightly more positive than previous readings and a continued signal of labour market resilience.
The Bigger Picture
At the moment, data feels secondary.
Not irrelevant, but secondary.
The dominant driver remains geopolitical risk and whether negotiations can move beyond headlines into something more concrete.
There is still time for progress, and these situations rarely resolve quickly. My sense is that this may continue to drag on, with markets gradually adapting to that reality rather than waiting for a clean resolution.
For clients and businesses, this environment reinforces the importance of staying proactive.
Periods like this tend to bring:
- sudden moves
- short-lived opportunities
- and increased risk if left unmanaged
As always, the key is not trying to predict every headline, but making sure you’re positioned properly when they hit.
GBP/EUR 1.1475 GBP/USD 1.3417 GBP/AED 4.9306
GBP/AUD 1.9021 GBP/CHF 1.0598 GBP/CAD 1.8580
GBP/NZD 2.3004 EUR/USD 1.1681 GBP/ZAR 22.1891