The GBP/USD pair is experiencing upward momentum, reaching approximately 1.3400 in the early hours of the Asian session on Monday. The US Dollar is experiencing a decline in value relative to the Pound Sterling as US President Donald Trump issues new tariff threats towards Europe concerning Greenland. The US markets will remain closed on Monday in observance of the Martin Luther King Jr. Day holiday. GBP/USD shows resilience, approaching the 1.3400 mark in the early hours of Monday’s Asian session. Trump announced that he would implement new tariffs on eight allied nations, including the UK, in response to their opposition to his suggested acquisition of Greenland. Market participants are closely monitoring the upcoming UK employment and CPI inflation reports scheduled for later this week.
It is reported on Saturday that an additional 10% import tariff will be imposed from February 1 on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and the United Kingdom until the US is permitted to purchase Greenland. European Union ambassadors reached a broad agreement on Sunday to intensify efforts to dissuade Trump from imposing levies on European allies, while France proposes to respond with a range of previously untested economic countermeasures.
The Greenback is experiencing selling pressure in light of this headline, as traders evaluate the long-term effects of Trump’s recent actions on the currency’s position. “While one might contend that the tariffs pose a risk to Europe, the reality is that the dollar is the one truly feeling the impact, as markets appear to be factoring in heightened political risk premia associated with the U.S. dollar,” stated Khoon Goh.
Market participants will pay close attention to the upcoming release of the UK employment figures and Consumer Price Index data, scheduled for later this week. These reports may provide insights into the monetary policy outlook of the Bank of England. Should the outcomes fall short of expectations, this may lead to a decline in the Cable relative to the USD in the short term.