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this pound Tuesday saw its most significant two-day gain since December, investor give up us Dollar Trade tensions between the United States and Europe over Greenland are escalating.
These measures depend on their Agree on U.S. ownership of Greenland, an autonomous Danish territory.
In response, investors sold U.S. assets, including the U.S. dollar, Mainly optimistic about European currencies and gold. Sterling has gained 0.8% over the past two days to around $1.348.
However, it has been overtaken by the resurgent euro, which has become the main beneficiary of the dollar’s decline. The euro rose 0.4% on Tuesday, its strongest performance since early November, and traded at 87.03 pence against the pound.
On the domestic front, earlier UK labor market data showed employment prospects looking grim.
Unemployment remained near a five-year high in November, with employment falling the most since November 2020.
Despite the numbers, analysts pointed to some positive indicators in the report that suggested the worst of the recession may be behind us.
George Buckley, chief UK and euro zone economist at Nomura, said the report also showed fewer job cuts, with job vacancies and the unemployment rate stabilizing and inactivity falling.
Wages growth, a key indicator for the Bank of England, has also slowed to what he calls the “inflation target consistent rate”.
He said: “This provides a favorable background for the central bank to cut interest rates again – we expect a final rate cut to 3.50% in April, and the market has priced in the risk of early/further interest rate cuts.”
The market currently expects the Bank of England to cut interest rates once before mid-year, and the probability of a second rate cut by December is about 60%.