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    GBP/USD rises towards 1.3460 as market players offload the dollar amid trade tensions

    by VT Markets
    /
    Jan 21, 2026
    The GBP/USD started Tuesday positively, trading at 1.3463, a rise of 0.30%, as the US Dollar weakened. This movement comes amid growing trade tensions among the US, Europe, and Greenland, impacting market confidence. During the European session, the Pound Sterling climbed to nearly 1.3490 against the US Dollar, building on earlier gains due to worsening relations between the US and the EU.

    Market Focus

    In the early Asian session on Tuesday, GBP/USD was steady around 1.3430 as traders awaited UK labor data. The market’s attention will soon shift to the UK Consumer Price Index and Retail Sales figures expected later this week. FXStreet’s legal text and disclaimers clarify that they do not guarantee the accuracy or timeliness of their information and this should not be considered investment advice. Users are encouraged to conduct their own research before making investments. FXStreet and the authors are not liable for any losses that may occur due to the information provided. The CBOE Volatility Index is at yearly highs, signaling caution for the markets. We observed similar spikes during the 2025 trade disputes, where the VIX briefly reached 40, causing significant sell-offs. Buying VIX call options or puts on the SPY can hedge against rising geopolitical risks.

    Investment Strategy

    The Pound’s strength against the Dollar seems poised to grow as the “Sell America” theme develops. We recommend buying call options on GBP/USD, targeting the 1.3500 level to take advantage of potential gains. This is backed by the persistent US trade deficit, which widened to over $70 billion per month in late 2025, creating challenges for the Dollar. Gold’s rise past $4,750 is not only a reaction to tariffs but also part of a broader shift away from US assets. In 2025, we saw a notable increase in global central banks boosting their gold reserves, distancing themselves from the Dollar. We recommend long positions through gold futures or call options on gold ETFs as our top choice for safe-haven investments. Create your live VT Markets account and start trading now.

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