The GBP/USD pair reversed in favor of the pound and has been rising for the second day in a row. Credit for this, of course, goes to Donald Trump, who continues to actively promote the idea of transferring Greenland to the United States and has already moved from threats to action. New 10% trade tariffs have been imposed on countries most actively opposing Trump's attempt to seize Greenland, which belongs to Denmark. Over time, if Europe does not agree to the transfer/sale of Greenland to the U.S., these tariffs may be raised to 25%. Let me remind you that Donald Trump has already imposed tariffs on many countries for the second or even third time. Each time, the U.S. president develops certain grievances against someone in the world, which immediately turn into threats and tariffs. Therefore, EU countries—and even the United Kingdom—are already used to this. The market, however, once again showed that it does not welcome a deterioration in U.S. trade relations with partners. Capital and investment continue to flow out of America, so the dollar is once again unwanted by traders and investors.

Since the bullish trend in the euro remains intact, in my view, the bullish trend in the pound also remains intact. I cannot imagine a bullish trend in the euro and, at the same time, a bearish trend in the pound. However, there are currently no workable bullish patterns. Therefore, one should wait for the formation of new bullish patterns in order to consider new buy trades. Is it worth trading bearish patterns? Certainly, that is possible. One must simply remember that any decline at the moment is classified as a corrective pullback.

The current chart picture is as follows. The bullish trend in the pound may be considered completed, but the bullish trend in the euro is not. Thus, in the long term, I still expect the pair to rise. In the coming days, a bullish imbalance may form, from which it will later be possible to trade to the upside.

On Monday, traders learned about new tariffs against the United Kingdom, which were met with condemnation in London. Prime Minister Keir Starmer said he would hold direct talks with Donald Trump in the near future and try to find a way out of the situation. He condemned Trump's attempt to pressure Denmark's territorial integrity through a new escalation of the trade war. However, I believe Trump understands very well what he is doing. Condemnation will not scare or stop him. The European Union is developing retaliatory measures, and the United Kingdom should also think about doing the same.

In the United States, the overall news background remains such that, in the long term, nothing but a decline in the dollar can be expected. The situation in the U.S. remains quite difficult. The government shutdown lasted a month and a half, and Democrats and Republicans agreed on funding only through the end of January, which is just two weeks away. U.S. labor market data continue to disappoint. The last three FOMC meetings ended with dovish decisions, and the latest data suggest that the pause in monetary easing will be short-lived. Trump's military aggression, threats against Denmark, Mexico, Cuba, and Colombia, the initiation of criminal proceedings against Jerome Powell, and new trade tariffs perfectly complement the current picture of an "American political crisis." In my view, the bulls have everything they need to launch a new offensive and return to last year's highs.

A bearish trend would require a strong and stable positive news background for the U.S. dollar, which is hard to expect under Donald Trump. Moreover, the U.S. president himself does not need a strong dollar, as the trade balance would remain in deficit in that case. Therefore, I still do not believe in a bearish trend for the pound, despite the fairly sharp decline in September and October. Too many risk factors continue to hang like dead weight over the dollar. On what basis are bears supposed to push the pound lower if a bullish trend is actually forming now? If new bearish patterns appear, a potential decline in the pound sterling can be reconsidered, but at the moment there are none.

News Calendar for the U.S. and the United Kingdom:

• United Kingdom – Consumer Price Index (07:00 UTC)

On January 21, the economic calendar contains one, but quite important, event. The impact of the news background on market sentiment on Wednesday may be present in the first half of the day.

GBP/USD Forecast and Trading Advice:

The picture for the pound remains clear. The bullish advance has been halted, and bears have gone on the offensive, but how long they will have enough strength given the current news background is unclear. I believe it will not be for long.

A resumption of the bullish trend can be expected only from new bullish patterns or after liquidity is taken from bearish swings. The nearest such swings are currently the lows from December 9 and December 17. As a target for potential growth, I continue to consider the level of 1.3725, but the pound could rise much higher in 2026, especially given the events of the first three weeks of the year. If bearish patterns form, short trades are also possible, but within a bullish trend I am a proponent of buying rather than selling.