Pound Sterling to Dollar Forecast: GBP Steadies despite Fresh US Trade Threats

Modified: Monday, 19 January 2026 21:16 BST - Written by Frank Davies

STORY LINK Pound Sterling to Dollar Forecast: GBP Steadies despite Fresh US Trade Threats

The Pound to US Dollar exchange rate (GBP/USD) opened the week on firm footing as investors reacted to fresh tariff rhetoric from US President Donald Trump linked to Greenland.

At the time of writing, GBP/USD was trading near $1.3403, only modestly up from Monday’s opening levels.

The US Dollar (USD) struggled for momentum at the start of the week as renewed geopolitical uncertainty weighed on investor confidence.

Over the weekend, Donald Trump outlined plans for additional tariffs on European nations opposing a potential US acquisition of Greenland. These measures would reportedly begin at 10% from 1 February and rise to 25% by 1 June should negotiations fail.

The prospect of tariffs being used against long-standing allies unsettled markets, fuelling concerns that a broader transatlantic trade dispute could emerge.

The European Union is already reportedly revisiting proposals for up to €93bn in tariffs on US goods, while speculation has also grown that some European states could scale back purchases of US Treasuries.

That said, losses in the US Dollar have so far been contained, with the currency finding some support from shifting expectations over who may next lead the Federal Reserve, following reports that Kevin Hassett could be out of contention.

The Pound (GBP) made modest gains against the US Dollar on Monday but was less convincing against several other major currencies.

The UK was included in Trump’s latest tariff warning, having backed Denmark’s sovereignty over Greenland.

Any escalation in trade barriers would risk adding further strain to an already fragile UK economy.

Addressing the issue at a press conference, Prime Minister Keir Starmer stressed that a tariff confrontation would serve no one’s interests and attempted to calm fears that the UK would respond with immediate retaliatory action.

GBP/USD Forecast: UK Labour Data to Drive Near-Term Direction?

Looking ahead, the Pound to US Dollar exchange rate could see increased volatility on Tuesday with the release of the UK’s latest employment figures.

Sterling may draw support if the data shows unemployment edged lower in November, after reaching a four-year high of 5.1% in October.

However, any gains could prove short-lived if the report also points to a slowdown in wage growth, which would reinforce expectations for looser UK monetary policy.

Meanwhile, the reopening of US markets on Tuesday could inject fresh movement into the US Dollar as American investors digest the implications of Trump’s latest tariff proposals.

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TAGS: Pound Dollar Forecasts