The Pound Sterling edges higher against the US Dollar, buoyed by disputes between the US and EU, as President Trump threatens 10% additional tariffs, including on the UK. The GBP\/USD pair is nearly 1.3400 during the European session, with the US Dollar Index trading 0.2% lower to around 99.15. The US Dollar weakens amid recent political tensions over Greenland.<\/p>\n
President Trump’s weekend announcement of tariffs, effective from February 1, stirs EU backlash. France’s President Macron criticises these threats, declaring them unacceptable. The Dollar faces market pressure, with analysts noting increased political risks. Major currency movements see the US Dollar weakest against the Swiss Franc, down 0.52%.<\/p>\n
The Pound Sterling experiences volatility against peers, influenced by imminent UK data releases and Trump’s tariff threats. UK PM Starmer emphasises dialogue over tariffs. UK economic data this week includes employment figures, consumer prices, retail sales, and PMI data. The Pound\u2019s direction may hinge on these releases and the Bank of England’s policy outlook.<\/p>\n
GBP\/USD nears the 1.3397 mark, grappling with the 50-Day EMA. The 14-day RSI indicates moderate momentum, with potential upside at 1.3401. However, a decline below 1.3309 could see the price fall to December\u2019s low of 1.3180. Average Earnings Including Bonus will be a key focus, with expectations at 4.6%.<\/p>\n
The primary market driver is the new US tariff threat against the EU and UK, which introduces significant political risk. While this is currently weakening the US Dollar more broadly, the direct threat to the UK economy creates a volatile situation for the Pound. We should anticipate a rise in implied volatility for GBP\/USD as we approach the February 1st tariff deadline.<\/p>\n
We must focus on tomorrow’s UK employment figures as a key catalyst for the Bank of England’s next move. After we saw the unemployment rate climb from the low 4% range throughout 2025 to its recent high, a drop to the expected 5.0% would be the first sign of stabilization. A disappointment in either the unemployment or wage growth figures would weigh heavily on Sterling.<\/p>\n
Given the binary risk from the tariff situation, buying options to trade the anticipated jump in volatility is a sensible strategy. A long straddle on GBP\/USD could capitalize on a sharp price swing following the UK data releases or any new political statements. This is a better approach than taking a purely directional bet in such an unpredictable environment.<\/p>\n
This situation is reminiscent of the US-China trade disputes we saw between 2018 and 2019, when unexpected tariff announcements caused large, sudden moves in currency pairs. Historical data from that period shows that headline risk can easily overpower fundamental data in the short run. Therefore, being positioned for a big move, rather than a specific direction, is key.<\/p>\n
Technically, GBP\/USD faces immediate resistance near the 1.3400 level. While the CME FedWatch tool shows markets are pricing in a greater than 90% probability of the Fed holding rates steady this month, dovish comments from Fed officials create a downside risk for the dollar. This could support the pound if UK data beats expectations, but the tariff risk remains a major ceiling on any potential rally.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Pound edges higher as US-EU tensions rise; GBP\/USD near 1.3400 amid tariff threats and key UK data.<\/p>\n","protected":false},"author":62,"featured_media":17031,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-39531","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/39531","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=39531"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/39531\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17031"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=39531"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=39531"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=39531"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}