GBP/USD reached a 10-week high, exceeding 1.2700 but retreated due to negative risk sentiment during the US trading session. The pair fell below the 200-day Exponential Moving Average, closing near 1.2680 as consolidation began.

President Trump announced a 25% tariff on European products, with a focus on cars, while postponing tariffs on Canada and Mexico until April 2nd. This tightening of trade relations may lead to inflationary pressure affecting the Pound Sterling.

Limited UK data contrasts with forthcoming US metrics, including GDP growth figures and Durable Goods orders. The US Personal Consumption Expenditure inflation data is anticipated on Friday.

The Pound Sterling is the world’s oldest currency and accounts for 12% of foreign exchange transactions, averaging $630 billion daily. Its value is heavily influenced by the Bank of England’s monetary policy, aiming for a steady inflation rate of around 2%.

The Trade Balance also impacts the Pound; a positive balance strengthens it, while a negative one weakens it.

We have seen GBP/USD climbing to its strongest level in ten weeks, momentarily rising past 1.2700 before losing ground as risk appetite turned negative later in the US session. The retreat below the 200-day Exponential Moving Average suggests the pair may be settling into consolidation, hovering near 1.2680.

Donald has escalated trade tensions by imposing a 25% tariff on European goods, predominantly targeting vehicles, while holding off on similar measures for Canada and Mexico until the start of April. This shift in trade policy is likely to feed into inflationary trends, increasing the cost of imports and possibly putting pressure on the Pound as the ripple effects begin to show.

With minimal domestic economic reports due, attention turns to upcoming data from across the Atlantic. Key indicators include growth figures and Durable Goods orders, providing insight into both consumer and industrial activity. The most closely watched release for the week will be Friday’s Personal Consumption Expenditure inflation reading, a preferred measure for assessing price trends in the United States.

Sterling remains one of the busiest currencies in global finance, responsible for 12% of daily foreign exchange deals, reaching roughly $630 billion. The Bank of England continues to guide policy with a 2% inflation target in mind, ensuring price stability remains the priority. Any shifts in expectations around rates here will carry considerable weight for the Pound’s direction.

At the same time, trade data will be something to watch. A surplus usually boosts the currency, while a shortfall exerts downward pressure by increasing reliance on external financing. Given the shifting trade environment, the effects on the exchange rate could become more pronounced, especially if adjustments in global supply chains follow.