GBP/EUR exchange rate week review: pound firms against euro following Trump’s Greenland remarks
12/01/2026 to 16/01/2026: The pound climbed into the mid-1.15 range as the single currency was undermined by geopolitical uncertainty surrounding Greenland, while soft German inflation data also weighed.
Monday
The pound euro (GBP/EUR) exchange rate accelerated into the 1.15 mid-range after the single currency was undermined by Donald Trump’s persistent claims that the US needs to control Greenland for strategic reasons, stating it would happen ‘one way or the other’ – leaving military action firmly on the table.
The comments left investors increasingly wary of the euro, particularly ahead of scheduled discussions between US and Danish officials later in the week.
This overshadowed research from KPMG and the Recruitment and Employment Confederation that pointed to a deterioration in UK business confidence at the end of 2025.
Tuesday
The pound ticked modestly higher against the euro as uncertainty surrounding Greenland and potential US military involvement continued to undermine the single currency. However, hopes of a diplomatic resolution were growing ahead of the meeting between Greenlandic, Danish and US representatives, helping to restrict the single currency’s losses.
The pound was muted amid the ongoing absence of UK economic data.
Wednesday
The pound euro rate was choppy as both currencies struggled to find momentum.
The ongoing lack of UK economic data left the UK currency lacking a clear direction. Remarks by Bank of England (BoE) policymaker Alan Taylor contributed to the indecision. Taylor noted that additional interest rate reductions might be warranted; however, he also indicated that borrowing costs may currently be approaching a neutral level.
Euro investors were hesitant as diplomatic representatives from Greenland and Denmark travelled to the US for crucial discussions. Optimism that the talks might defuse tensions was tempered by US President Donald Trump, who reiterated that “we need Greenland for national security”.
Thursday
The pound softened against the euro despite an encouraging GDP print. A 0.3% expansion weakened calls for another BoE rate cut next month, but analysts warned it likely won't stop growth from stalling in late 2025.
The single currency traded sideways following the release of mixed German GDP figures. While the 2025 data showed the Eurozone’s largest economy returned to growth for the first time since 2022, it also included a downgrade to 2026 growth from –0.2% to –0.5%.
Friday
With UK data thin on the ground, German inflation data was in sharp focus for investors.
The pound firmed against the euro after the print showed German inflation slowed significantly in December to a 15-month low, denting the single currency. This presented the European Central Bank (ECB) with even more licence to adopt a dovish policy approach.
The pound euro exchange rate ended the week around 1.152.
Looking ahead
A raft of notable UK data will be closely monitored by investors: ILO Unemployment Rate and Average Earnings on Tuesday, Consumer Price Index on Wednesday, and Retail Sales and PMIs on Friday.
Inflation in the UK cooled further to 3.2% in November, supporting the BoE’s decision to cut interest rates at the end of 2025. If the print for December matches forecasts for inflation to edge up to 3.3%, the pound could find support amid waning expectations of further policy easing.