GBP/USD rallies as Trump tariff threats against Europe weigh on US Dollar

GBP/USD climbs as Trump threatens tariffs on Europe, reviving trade war fears and weakening the US Dollar.
The European Union and the United Kingdom signal a potential retaliation, adding pressure on the Greenback amid rising geopolitical uncertainty.
Traders eye UK jobs, inflation data and Trump’s speech in Davos for fresh Sterling catalysts.

Christian Borjon Valencia FXStreet

GBP/USD rises on Monday after tensions between the US and Europe had grown following a social media post of US President Donald Trump threatening to impose duties on eight European countries. At the time of writing, the pair trades at 1.3414, up 0.28%.

Sterling advances as US–Europe trade tensions spark broad Dollar selling

Over the weekend, Trump announced 10% tariffs on eight countries, including Denmark, Norway, Sweden, France, Germany, Finland, the Netherlands and the UK. The duties would be effective on February 1 and would be increased to 25% on June 1 if they failed to reach an agreement, so the US can annex or purchase Greenland.

As a response, the European Union (EU) and the UK seem set to retaliate against the US. The EU is preparing to impose €93 billion of tariffs on the US or restrict American companies from the European market.

The news is a headwind for Greenback, which is down 0.38% in the day, according to the US Dollar Index (DXY). The DXY, which measures the US Dollar’s performance against a basket of six currencies, is down 0.30% to 99.08.

According to Reuters, UK Prime Minister Keir Starmer called for a calm discussion on Greenland on Monday.

Meanwhile, GBP/USD has risen on broad US Dollar weakness, in tune with seasonality. During the last five years, Sterling posted positive numbers even though the swaps market had priced in less easing on the Federal Reserve than on the Bank of England.

Ahead this week, the UK docket will feature jobs data and inflation figures. In the US, traders will eye jobs, housing data and a speech by US President Donald Trump at the World Economic Forum in Davos.

In two of the last five years, Sterling was positive in January, but so far in 2026 is down after traders priced out fewer rate cuts by the Federal Reserve towards the end of the year.

GBP/USD Price Forecast: Technical outlook

The GBP/USD technical picture shows the pair remains downward biased, but a daily close above the 200-day Simple Moving Average (SMA) at 1.3400 could sponsor a recovery if buyers reclaim the latest cycle high of 1.3567, the January 6 high.

Otherwise, if sellers drive the pair below 1.3400, expect further losses with the 50-day SMA being the next support below the 200-day SMA at 1.3325, followed by 1.3300.

Pound Sterling Price This Month

The table below shows the percentage change of British Pound (GBP) against listed major currencies this month. British Pound was the strongest against the Canadian Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.98%	0.38%	0.98%	1.21%	-0.57%	-0.02%	0.63%
EUR	-0.98%		-0.63%	0.06%	0.30%	-1.16%	-0.92%	-0.27%
GBP	-0.38%	0.63%		0.70%	0.95%	-0.53%	-0.29%	0.36%
JPY	-0.98%	-0.06%	-0.70%		0.15%	-1.43%	-1.46%	-0.23%
CAD	-1.21%	-0.30%	-0.95%	-0.15%		-1.57%	-1.60%	-0.57%
AUD	0.57%	1.16%	0.53%	1.43%	1.57%		0.24%	0.90%
NZD	0.02%	0.92%	0.29%	1.46%	1.60%	-0.24%		0.65%
CHF	-0.63%	0.27%	-0.36%	0.23%	0.57%	-0.90%	-0.65%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

GBP/USD extends the drop to 1.3360

GBP/USD builds on Monday’s decline and briefly clinches five-day lows near 1.3360 on Tuesday. Cable’s extra pullback follows the better tone in the Greenback as uncertainty in the Middle East prompts investors to adopt a cautious stance. Meanwhile, an apathetic UK labour market report also collaborates with the selling pressure on the British Pound.

EUR/USD stays offered just above 1.1400

EUR/USD keeps the downtrend well in place for yet another day, challenging the 1.1400 contention zone on Tuesday. The continuation of the selling impulse in spot comes amid decent gains in the US Dollar, which continues to find support in the persistent effervescence surrounding the US-Iran crisis.

Middle East crisis intensifies, Gold up

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XRP rebounds on rising on-chain activity

Ripple (XRP) ticks up and trades around $1.13 at the time of writing on Tuesday. This rebound aligns with a broader recovery in the cryptocurrency market, attributed to reports that mediators between the United States (US) and Iran are seeking a 10-day cessation of strikes to find a way back to the signed Memorandum of Understanding (MoU).

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