The Pound Sterling has risen against the US Dollar due to rising tensions between the US and Europe. President Trump’s threats of tariffs on European nations have affected the USD. As a result, the GBP/USD is trading at 1.3414, which is a 0.28% increase. This change is happening as the USD weakens over conflicts with the EU about Greenland. During the European trading session, the Pound Sterling climbed to around 1.3400, thanks to the weak performance of the USD. This situation stems from political tensions regarding Washington’s desire to buy Greenland, which the EU has viewed with skepticism. These issues have led to a volatile market.

Asian Session Impact

As the Asian session began, the GBP/USD kept rising, reaching about 1.3400. The USD remains under pressure due to Trump’s tariff discussions, and the US markets are closed for Martin Luther King Jr. Day. This has led to fluctuations in various assets and currencies, highlighting how sensitive the market is to political events. This week started with market volatility; equities fell, gold prices soared, and Treasuries gained interest. In contrast, meme coins like Dogecoin, Shiba Inu, and Pepe dropped around 3% on Monday, falling below crucial support levels. Cryptocurrency investments have seen $2.17 billion in net inflows, a positive sign since October. We’re seeing a repeat of market patterns today, January 19, 2026, similar to last year. In late January 2025, threats of US tariffs on the EU led to a rapid sell-off of the US Dollar, pushing GBP/USD close to the 1.3400 level. This geopolitical tension created significant opportunities for those prepared.

Market Signals and Strategies

Today, the administration is showing a tougher trade approach towards the Asia-Pacific region, which is once again weakening the dollar. Meanwhile, GBP/USD is trading around 1.2950. Last week’s US CPI data came in slightly higher at 3.1%, complicating the Federal Reserve’s decisions and adding to currency uncertainty. This economic backdrop could lead to a repeat of last year’s volatility. For derivative traders, this suggests possible increases in price swings in the upcoming weeks. The CME’s British Pound Volatility Index (BPVIX) has already risen to 8.5 from a low of 7.2 last month, indicating that options markets expect larger movements. This setting might make long volatility strategies, like buying straddles or strangles on GBP/USD, a good way to handle the expected fluctuations. However, unlike last year, both the Federal Reserve and the Bank of England are taking a more aggressive stance due to ongoing core inflation. This could limit the potential gains for GBP/USD, as the Bank of England may not be able to stray far from the Fed’s policies. Traders might want to consider call spreads to aim for a controlled move up to the 1.3100-1.3200 resistance range instead of hoping for a dramatic rally like in 2025. Create your live VT Markets account and start trading now.

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