GBP/USD fell to approximately 1.2580 during the early European session on Friday, remaining below 1.2600. This decline follows recent tariff threats from US President Donald Trump, which adds pressure on the Pound Sterling against the US Dollar.

Trump’s discussions with UK Prime Minister Keir Starmer indicated potential trade tariffs unless terms of a deal are agreed upon by an unspecified deadline. This geopolitical uncertainty may impact the GBP/USD exchange rate.

The pair dropped nearly 0.6% on Thursday as risk sentiment weakened amid US economic data suggesting a slowdown. The US Dollar Index rose above 107.00, influenced by Trump’s statements on tariffs and positive US Durable Goods Orders for January.

With the Pound Sterling already struggling, worries about fresh tariffs from Washington add further weight. The conversation between Donald and Keir has left markets guessing about potential disruptions to trade, introducing yet another layer of unpredictability. Until there is more clarity, traders may hesitate to take large positions on this currency pair.

Thursday’s fall, close to 0.6%, highlights the Pound’s sensitivity to shifts in the US economy, particularly when investor confidence is fragile. The latest US data implies that growth may be losing steam, with traders rushing to the Dollar as a safe haven. Adding to this, the Dollar Index pushing past 107.00 reflects strong demand, fuelled by both Donald’s tariff talk and better-than-expected Durable Goods Orders.

If the Dollar remains in demand while uncertainty lingers over trade discussions, the Pound may struggle to find support in the short term. A potential concern for traders is whether the pressure on Sterling will intensify if further details emerge about tariffs. Without firm commitments from policymakers, there are few reasons to bet on an abrupt recovery.

Looking ahead, movement in GBP/USD will likely respond sharply to any fresh statements from Washington or London. Any sign that tariffs are more than just a negotiation tactic could lead to sharper declines. Conversely, a softer stance or reassurances from Keir on economic stability may offer the pair some relief.

On the data front, upcoming reports from both sides of the Atlantic could shift the outlook. If new figures from the US reinforce slowdown concerns, the belief in Dollar strength may weaken slightly, preventing the Pound from slipping too far. On the other hand, any signs that inflation remains stubbornly high could strengthen bets on prolonged tight policy from the Federal Reserve, keeping the Dollar in favour.

For short-term strategies, traders may find opportunities in the pair’s fluctuations, especially if volatility rises around key announcements. The Pound is likely to remain under pressure as long as uncertainty persists, while the Dollar’s strength will depend on whether economic indicators justify its current momentum.