The British pound hovered around $1.34, staying above the four-week low of $1.338 touched on January 15, as US-Europe tensions appeared to ease for now. US President Donald Trump said he would refrain from imposing tariffs on goods from European countries opposing his plan to take control of Greenland. He also noted that a “framework for a future deal” had been agreed following talks with NATO, though details of any agreement remain unclear. Meanwhile, investors digested a batch of UK economic data. The public sector budget deficit narrowed to £11.6 billion in December, below market expectations of £13 billion. Headline CPI inflation rose to 3.4%, slightly above forecasts of 3.3%, while services inflation, a key measure of domestic price pressures watched by the Bank of England, edged up to 4.5% from 4.4%, marking a smaller-than-expected increase. The unemployment rate remained at 5.1%, a pandemic-era high, while wage growth slowed to 4.5%, its weakest pace since April 2022.
