The Pound Sterling (GBP) is showing weakness against the US Dollar (USD), trading near 1.2570. This decline is influenced by a cautious market sentiment following President Trump’s announcement of additional tariffs on China, alongside import duties on Canada and Mexico.

As of Friday, the US Dollar Index (DXY) has risen to 107.45. The GBP/USD pair has lost over 0.5% in value recently and appears to be consolidating around the 1.2600 level while awaiting further economic data from the US, specifically January inflation figures. During the previous trading session, the USD gained strength due to safe-haven demand amid broader market concerns.

The British Pound has struggled to hold its ground against the US Dollar, dipping to around 1.2570. This move lower comes as traders weigh the latest policy decisions out of Washington. President Trump’s tariffs on Chinese goods, as well as additional levies on imports from Canada and Mexico, have shaken investor confidence. That uncertainty has only strengthened demand for the US Dollar, driving the broader currency index up to 107.45.

This selling pressure on Sterling has resulted in a steep decline of more than 0.5% in the last few sessions, pulling the exchange rate closer to 1.2600. For now, the pair appears to be in a holding pattern, with traders pausing before the release of January’s inflation numbers from the United States. The movements in the previous session were mainly driven by a shift towards safer assets, boosting the Dollar as concerns spread across financial markets.

Looking ahead, traders in GBP/USD should be prepared for further volatility as fresh economic data is expected. Inflation figures from the US will be pivotal, particularly for those involved in derivatives. If the inflation report comes in above expectations, we will likely see an increase in speculation surrounding Federal Reserve policy, putting further pressure on the Pound. Conversely, a weaker reading could weaken demand for the Dollar, allowing Sterling some temporary relief.

Beyond data releases, sentiment among investors remains fragile due to trade policies from the US government. The introduction of new tariffs—particularly on China—has reignited worries about disruptions to global supply chains. This kind of uncertainty tends to favour the Greenback, meaning any abrupt policy updates from Washington could add to Sterling’s struggles. Traders must remain alert to potential comments from key officials, as any shift in rhetoric could trigger sudden market movements.

The technical picture also suggests that the Pound is under pressure. A sustained break below 1.2570 may open the door to further declines, with the next area of interest sitting closer to 1.2500. On the other hand, if Sterling manages to rebound and push beyond 1.2630, short-term traders may see opportunities for a recovery towards 1.2700. For those managing risk via options or futures, adjusting hedge positions accordingly could be a wise approach given the potential for sharp price swings.

With so many moving parts—from trade policies to inflation data and interest rate speculation—the coming weeks could be particularly volatile. We must continue monitoring shifts in investor sentiment while keeping a close eye on technical levels that may influence trading decisions.