Inflation Moderates While Markets Face New Pressures

Publish Date

April 20, 2026

Weekly Market Report Market Recap: April 13 – 17, 2026

Last week was shaped by stronger UK growth, slightly softer US inflation data, and continued guidance from the European Central Bank, all against a tense geopolitical backdrop.

UK Growth Surprises to the Upside UK February GDP came in at 0.5% vs 0.1% expected, highlighting stronger-than-anticipated economic momentum. This reduces immediate pressure on the Bank of England to cut rates and supported sterling as growth expectations improved.

US Producer Inflation Cools US PPI printed at 3.8% vs 4.2% expected, signalling some easing in pipeline inflation pressures. While not decisive, it supports the view that inflation is gradually moderating, giving the Federal Reserve more flexibility later in the year.

ECB Communication Remains Cautious Christine Lagarde reiterated a cautious, data-dependent stance, pointing to persistent inflation risks while also acknowledging the growing impact of geopolitical tensions.

Market Takeaway The overall theme remains gradual adjustment, stronger UK data, modest US disinflation, and a cautious eurozone, with no major central bank pivot yet.

Key Events to Watch: April 20 – 24, 2026

UK Unemployment (Tuesday, April 21) Consensus: 84K Focus will be on labour market resilience and implications for Bank of England policy.

US Retail Sales (Tuesday, April 21) Consensus: 1.3% A key gauge of consumer strength and the outlook for the Federal Reserve.

Eurozone PMI Data (Thursday, April 23) HCOB composite, manufacturing, and services PMIs will provide a forward-looking read on eurozone growth momentum.

Macro Theme: Strait of Hormuz & Oil Volatility

Tensions around the Strait of Hormuz remain a key driver of market volatility.

The strait was briefly reopened, easing immediate supply concerns, but was then closed again in retaliation to a US naval blockade linked to actions under Donald Trump. This back-and-forth has led to sharp swings in oil prices.

With a significant share of global oil supply passing through this route, the implications are substantial:

Renewed disruptions risk pushing oil prices higher, feeding into inflation
Volatility in energy markets is increasing broader market uncertainty
Safe-haven flows may continue to support the US dollar

Crucially, the outcome of ongoing ceasefire talks is now of high importance. Any de-escalation could stabilise oil markets, while further escalation would likely intensify volatility and inflation risks.

Summary

Last week combined stronger UK growth, softer US inflation, and cautious ECB messaging, reinforcing a steady, data-dependent outlook.

This week shifts focus to labour data, retail sales, and PMI surveys, while geopolitical developments, particularly around the Strait of Hormuz and ceasefire negotiations, remain a critical driver.

Expect elevated volatility, with markets sensitive to both economic data and geopolitical headlines.

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Inflation Moderates While Markets Face New Pressures

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