• EUR/GBP trades flat as US-Iran peace headlines trigger volatility across the FX market.
• The Euro trims earlier gains as uncertainty surrounding the US-Iran deal keeps traders cautious.
• Sterling struggles ahead of UK municipal elections amid speculation over Prime Minister Starmer’s position.

EUR/GBP trades flat on Wednesday after trimming earlier gains as geopolitical headlines surrounding a potential US-Iran peace deal triggered fresh volatility across the FX market. At the time of writing, the cross is trading around 0.8635, little changed on the day after touching an intraday high of 0.8649.

The Euro (EUR) strengthened earlier in the European trading session after Axios reported that Washington and Tehran are moving closer to a potential agreement aimed at ending the war and establishing a framework for detailed nuclear negotiations.

However, the Euro’s gains proved short-lived as uncertainty remained elevated with US President Donald Trump warning that military action could resume if Iran does not agree to the deal.

Iran’s Foreign Ministry spokesperson said Tehran is reviewing the latest US proposal and will convey its response to Pakistan, according to Iran’s ISNA News Agency. ISNA also reported that parts of the Axios report were “speculation,” adding that the US proposal contains “ambitious and unrealistic” demands.

Meanwhile, the British Pound (GBP) is also struggling to gain traction ahead of Britain’s municipal elections on Thursday, as speculation continues to swirl around Prime Minister Keir Starmer’s position, with polls suggesting the Labour Party could face a significant setback.

This is helping limit the downside in EUR/GBP, with price action remaining largely range-bound near recent lows. Traders also digested the latest Services Purchasing Managers Index (PMI) data from both the Eurozone and the United Kingdom.

In the UK, the S&P Global Services PMI was revised slightly higher to 52.7 in April from the preliminary estimate of 52.0 and up from March’s 11-month low of 50.5. Meanwhile, the Composite PMI improved to 52.6 from 50.3 in the previous month, beating both the flash estimate of 52.0 and market expectations of 49.8.

On the Eurozone side, the S&P Global Services PMI was revised up marginally to 47.6 in April from 47.4, though it still fell sharply from 50.2 in March. The Composite PMI also dropped to 48.8 from 50.7 previously, despite a slight upward revision from the preliminary estimate of 48.6.