GBP/USD Surges Amidst US Dollar Weakness Driven by Geopolitical Events

GBP/USD caught a much-needed bullish bounce on Monday, driven higher by a broad-market decline in the US Dollar (USD) rather than any particular strength behind the Pound Sterling (GBP). US President Donald Trump has informed the world that he wants to own Greenland, a proposal that has met stiff opposition from the European Union, including the Kingdom of Denmark, of which Greenland is an autonomous territory, and Greenland itself. Donald Trump has escalated rhetoric about the US “owning” Greenland, hinting at a more aggressive stance that he partially attributes to being snubbed for the Nobel Peace Prize, despite being reminded by Norway’s prime minister that the prize is awarded by an independent committee. He has also threatened to impose a 10% tariff on US exports to European countries starting February 1, rising to 25% by summer, unless the European Union cedes an entire nation to the United States. European leaders swiftly responded with reciprocal tariff threats, which are expected to further strain already pressured American industries. Trade war headlines to mix with a full data schedule Cable traders are heading into a hectic midweek. Over and above the ongoing trade war headlines, the UK opens up Tuesday with the latest Claimant Count Change and Employment Change figures from December and November, respectively. Wednesday will follow up with the latest UK Consumer Price Index (CPI) inflation figures from December, and UK Purchasing Manager Index (PMI) survey results will trail along on Friday. On the US side, traders will see the latest ADP Employment Change 4-week average numbers on Tuesday, followed by a scheduled speech from President Trump on Wednesday. A hot update to US Personal Consumption Expenditure Price Index (PCE) inflation is slated for Thursday. Friday will wrap up the trading week with a fresh round of S&P Global US PMI survey results for January. GBP/USD price forecast Monday’s early-week bullish bounce has given GBP/USD a fresh foothold on the high side of the 50-day Exponential Moving Average (EMA) just below 1.3400, but overall price action is still leaning into the bearish side. Cable has been on a slow grind lower since flubbing the 1.3550 level in early January, and the Stochastic Oscillator is still showing some room to run lower despite knocking on the oversold barrier. GBP/USD daily chart