The pound sterling and the US dollar traded higher on Tuesday, with GBP/USD rallying to a one-week high as tariff tensions linked to Greenland weighed on the ‘Greenback’ while mixed UK jobs data failed to dent Sterling.
Pound to Dollar (GBP/USD): 1.34324 (+0.1%)
Euro to Dollar (EUR/USD): 1.17174 (+0.67%)
Dollar to Japanese Yen (USD/JPY): 158.1935 (+0.02%)
DAILY RECAP:
The US Dollar (USD) remained under pressure on Tuesday as markets continued to digest US President Donald Trump’s latest tariff threats tied to Greenland.
Trump has warned he will impose additional tariffs on eight European nations that oppose US efforts to acquire Greenland, escalating tensions between Washington and its traditional allies. The prospect of a transatlantic trade war unsettled USD investors, amid concerns that such measures could harm US growth and prompt European countries to reassess their exposure to US Treasuries.
These fears lingered through the session as Trump hardened his rhetoric in response to diplomatic pushback from European leaders, reinforcing a modest ‘sell-America’ bias across markets.
The Pound (GBP) firmed against the Dollar despite a mixed UK labour market report.
Employment rose by 82,000 in the three months to November, comfortably beating forecasts for a 27,000 increase. However, the unemployment rate held steady at a multi-year high of 5.1%, while wage growth slowed, albeit remaining above inflation.
While the data offered little clarity on the UK economic outlook, it was sufficient to support Sterling against a weakening US Dollar.
Near-Term GBP/USD Forecast: Will Sticky UK Inflation Keep Sterling Supported?
Looking ahead, attention turns to the UK’s upcoming consumer price index release, which could prove pivotal for the Pound.
Headline inflation is forecast to edge higher from 3.2% to 3.3% in December, remaining well above the Bank of England’s 2% target, while core inflation is expected to hold at 3.2%. A firmer inflation reading could see markets scale back expectations for an imminent BoE rate cut, lending further support to GBP.
Conversely, any unexpected cooling in price pressures may revive dovish speculation and leave the Pound vulnerable.
For the US Dollar, the absence of major data releases means Trump’s tariff rhetoric and developments around Greenland are likely to remain the dominant drivers. If concerns continue to fuel a broader ‘sell-America’ narrative, USD may struggle to recover ground.
