GBP/USD climbed to around 1.3520 in early Asian trading on Monday. The US Dollar slipped as tariff uncertainty stayed in focus. Markets are now watching the US Producer Price Index (PPI) for January, due on Friday. Both headline and core PPI are expected to rise 0.3% month on month. On Friday, the US Supreme Court ruled that Trump’s tariffs were illegal and beyond his authority. Trump then announced a 15% levy on imports. Reuters reported that the replacement tariffs would last for 150 days. It is still unclear whether importers will get refunds for duties already paid.

Uk Retail Sales Boost Sterling

UK data helped the pound after Retail Sales rose 1.8% month on month in January. That was up from 0.4% previously and above the 0.2% forecast. Retail Sales also rose 4.5% year on year, compared with 1.9% previously (revised from 2.5%) and above the 2.8% estimate. Sterling is the UK currency. It was first issued in 886 AD. It is the fourth most traded currency and accounts for about 12% of FX transactions, or roughly $630 billion a day in 2022. Key pairs include GBP/USD at 11%, GBP/JPY at 3%, and EUR/GBP at 2%. The pound is gaining momentum above 1.3500. This move is supported by two factors: political uncertainty in the US and strong UK data. Together, they argue for near-term sterling strength. Dollar weakness remains the main driver, and it is closely tied to confusion around the new 15% import levy. The pound is also supported by solid fundamentals. The Office for National Statistics recently reported a strong rise in January retail sales that beat expectations. Strong consumer demand can reduce pressure on the Bank of England to cut rates, which can make the pound more attractive to hold. UK consumer spending also held up well in 2025, and that resilience appears to be continuing.

Tariff Uncertainty Lifts Volatility

For traders, the key development is the jump in uncertainty from the new 15% blanket levy, which is keeping the dollar under pressure. This is showing up in the options market. One-month implied volatility for GBP/USD is rising toward 7.5%, a level not seen since the market turbulence in late 2025. This kind of backdrop can favor strategies that aim to benefit from larger price swings, not just direction. Focus now shifts to Friday’s US PPI release. The market expects a 0.3% monthly gain, in line with readings from the last quarter of 2025. In the past, hotter-than-expected inflation data has often supported the dollar, so traders may prepare for a similar reaction. An upside surprise could quickly reverse the pound’s recent gains against the greenback. With mixed signals, one approach is to use options to keep a bullish pound view while limiting the risk around Friday’s data. Buying GBP/USD call options can allow traders to benefit if sterling continues to rise, while the premium paid is the maximum loss if US inflation data surprises to the upside. This defined-risk setup offers exposure to the uptrend without taking full risk of a sharp reversal. Create your live VT Markets account and start trading now.

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