The GBP/USD pair saw an increase on Monday due to escalating tensions between the US and Europe, which were heightened by President Trump’s recent social media post threatening tariffs on eight European nations. Currently, the pair is trading at 1.3414, marking a 0.28% increase.
US-Europe trade tensions trigger widespread dollar selling, pound rises
Over the weekend, President Trump revealed plans to impose 10% tariffs on eight countries, including Denmark, Norway, Sweden, France, Germany, Finland, the Netherlands, and the UK. These tariffs are set to take effect on February 1st, climbing to 25% by June 1st unless a resolution is reached regarding the US’s interest in Greenland.
In retaliation, the EU and the UK seem ready to respond against the US. The European Union is contemplating tariffs amounting to 93 billion euros on US products or limiting American companies’ access to EU markets.
The US Dollar Index (DXY) reflects the impact of this news, showing a 0.38% decline for the day. The dollar index, which tracks the dollar’s performance against a selection of six currencies, dipped 0.30% to 99.08.
British Prime Minister Keir Starmer urged for a composed dialogue regarding Greenland on Monday, as reported by Reuters.
The rise in GBP/USD aligns with the broader weakening of the US dollar, which is somewhat seasonal. Historically, January has seen positive trends for the pound, despite market thoughts indicating less easing from the Federal Reserve compared to the Bank of England.
This week, key UK documents will cover employment and inflation metrics, while traders in the US will focus on jobs, housing data, and President Trump’s address at the World Economic Forum in Davos.
Interestingly, the pound has been positive in January two out of the last five years. However, it has faced some challenges so far in 2026, as traders anticipate fewer interest rate cuts from the Federal Reserve as the year progresses.
GBP/USD Price Prediction: Technical Outlook
The technical indicators for GBP/USD suggest a downward bias, although a daily close above the 200-day simple moving average (SMA) at 1.3400 might indicate a potential recovery, especially if buyers manage to reclaim the recent high of 1.3567 (noted on January 6).
If sellers manage to push the pair below 1.3400, additional losses could occur, with the 50-day SMA at 1.3325 becoming the next crucial support level, followed by 1.3300.
This month’s British pound price
The table below outlines the percentage change of the British Pound (GBP) against major currencies this month, with the pound currently seeing its strongest performance against the Canadian dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| 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% | |
| australian dollar | 0.57% | 1.16% | 0.53% | 1.43% | 1.57% | 0.24% | 0.90% | |
| new zealand dollar | 0.02% | 0.92% | 0.29% | 1.46% | 1.60% | -0.24% | 0.65% | |
| swiss franc | -0.63% | 0.27% | -0.36% | 0.23% | 0.57% | -0.90% | -0.65% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select British Pounds from the left column and move along the horizontal line to US Dollars, the percentage change displayed in the box represents GBP (Base)/USD (Quote).
