The pound traded largely unchanged just above $1.34, edging up from a four-week low near $1.338 touched on January 15, as investors digested the latest UK labor market data amid ongoing geopolitical tensions that continued to weigh on the greenback. UK unemployment was unchanged at 5.1% in the three months to November, hovering near pandemic-era highs and slightly exceeding expectations of 5%. Meanwhile, annual wage growth excluding bonuses slowed to 4.5%, marking its weakest pace since the three months to April 2022. At the same time, renewed tariff threats from US President Trump continued to pressure the dollar while global leaders convened in Davos. Trump suggested that Europe would be unlikely to “push back too much” after warning over the weekend that he could impose additional tariffs on eight European countries unless the US is permitted to “buy” Greenland. Any escalation would disproportionately affect the UK and Germany, Europe’s most exposed exporters to the US market.
