Xcode 26.4 final is available and has resolved this issue. The iOS 26.4 simulator does correctly display emoji/unicode. Install Xcode 26.4 from the Mac App Store or similar to resolve this issue.

Thank you to Albert for his post above. With regard to the post, for me following the instructions to reinstall the iOS 26.3 and simulator did not work as it reinstalled the same simulator with the same issue. However I am pleased to report that I tested the Xcode 26.4 RC with the accompanying simulator and it does resolve this issue. I see that a final iOS 26.4 has been released, so the matching final Xcode is due very shortly to put this behind us. Cheers.