Pound to Euro Choppy as Greenland Dispute Clouds Outlook

Modified: Monday, 19 January 2026 21:16 BST - Written by Frank Davies

STORY LINK Pound to Euro Choppy as Greenland Dispute Clouds Outlook

The Pound to Euro exchange rate (GBP/EUR) got off to a choppy start this week as a combination of looming UK economic data and rising geopolitical tensions left the pairing without clear direction.

At the time of writing, GBP/EUR was trading around €1.1528, little changed from its opening levels as markets struggled to find a decisive catalyst.

The Euro (EUR) wavered early in the session as investors digested fresh US comments on Greenland made over the weekend.

US President Donald Trump warned he could impose tariffs on eight European nations over their backing of Greenland and Denmark, as Washington renewed its push to gain control of the Arctic territory.

The remarks marked another escalation in the Greenland dispute and underscored deteriorating relations between the US and the EU, keeping markets on edge.

Even so, the Euro avoided sustained losses. Its strong inverse relationship with the US Dollar (USD) offered some protection, as the ‘Greenback’ came under pressure following Trump’s latest tariff threat.

The Pound (GBP), meanwhile, traded without clear direction as investors avoided taking strong positions ahead of a packed week of UK economic releases.

With fresh labour market figures, inflation data, retail sales and preliminary PMIs all due in the days ahead, GBP traders appeared content to remain sidelined at the start of the week.

This cautious approach helped cushion Sterling against losses, despite the UK being listed among the European countries facing potential US tariffs over its support for Greenland.

GBP/EUR Forecast: UK Jobs Data to Set the Tone

Looking ahead, the UK economic calendar gathers momentum on Tuesday with the release of the latest labour market report.

The data could play a key role in shaping Bank of England (BoE) interest rate expectations. Any signs that the jobs market is losing momentum may weigh on the Pound by strengthening the case for further rate cuts.

However, the outlook remains mixed. Wage growth is expected to have cooled only marginally in the three months to November and continues to outpace inflation. At the same time, while payrolled employment is forecast to have declined, the unemployment rate is tipped to edge down from 5.1% to 5%.

With the report likely to deliver conflicting signals, Sterling may struggle to establish a clear direction. That said, any meaningful deviation from expectations could trigger a burst of volatility.

For the Euro, Germany’s ZEW economic sentiment index is the standout release. A forecast improvement in January could lend the single currency some support, although lingering concerns over Greenland and wider US-EU tensions may continue to cap EUR gains.

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TAGS: Pound Euro Forecasts