The pound weakened to its lowest level against the euro in more than two weeks on Tuesday, a day that featured more grandstanding and trade threats between the United States and Europe.
What does the wrangling over Greenland mean for your money? In the short term, it’s fair to say that recent events have spooked the markets. The euro has strengthened despite questions around its trade deal with the United States. We would strongly recommend you lock in today’s rate to protect yourself from further fallout. If you’d like to do that now, simply call your account manager on 020 8003 4915 and they’ll be able to assist you.
The picturesque Swiss ski resort of Davos was an unlikely location for the spat between Western powers, perhaps the largest and most consequential (and certainly the most open) since the Second World War. President Trump and his envoys stressed there was “no going back” on their policy while European leaders lambasted American “colonial” ambitions.
Tuesday wasn’t a great day for the vaunted special relationship between Britain and the United States. Sir Keir Starmer has attempted to play the role of mediator but saw the president turn his ire towards Whitehall. Trump publicly questioned the thinking behind the UK decision to hand control of the Chagos islands to Mauritius, a decision he had previously backed.
Sterling is also being affected by this morning’s news that headline inflation increased to 3.4% in December, marking the first time consumer prices have increased in five months. That information comes after a jobs update yesterday showed falling employee wages and reduced headcount in the private sector.
The financial world was more than a little spooked by the ongoing theatrics. Safe-haven assets like gold reached new record highs yesterday as stock markets and the US dollar stumbled amid low appetite for risk.
There’s still plenty of time for things to change between now and the weekend. Greenland will be at the top of minds, but there’s also a chance the US Supreme Court make their long-awaited ruling on the legality of Trump’s tariff regime. That could throw another spanner in the works and would likely result in more chaos in the world of currency.
