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• GBP/USD edges lower to around 1.2580 in Friday’s early European session. 
• Trump’s tariff threats weigh on the Pound Sterling. 
• Investors brace for the US January PCE inflation data, which is due later on Friday. 

The GBP/USD pair extends its downside to near 1.2580 during the early European session on Friday. Tariff uncertainty from US President Donald Trump undermines the Pound Sterling (GBP) against the US Dollar (USD). The US Personal Consumption Expenditures (PCE) Price Index for January will be the highlight later on Friday. 

Trump met with UK Prime Minister Keir Starmer late Thursday, and President Trump was quick to announce that there might be trade tariffs imposed on the UK as well unless ambiguous terms of a trade deal with the US are agreed upon within an undetermined deadline. Investors will closely watch the developments surrounding further Trump’s policies. Any signs of escalating trade tensions could lift the Greenback and create a headwind for GBP/USD. 

Data released by the US Bureau of Economic Analysis (BEA) on Thursday showed that the Gross Domestic Product (GDP) expanded at an annual rate of 2.3% in the fourth quarter (Q4). This figure matched the initial estimate and came in line with the market consensus. 

Looking ahead, investors will take more cues on the US PCE inflation data for January, which is due on Friday. This report could influence market speculation for the Federal Reserve's (Fed) monetary policy outlook. According to the CME FedWatch tool, the markets are now pricing in nearly 68% odds that the Fed will cut its interest rate in the June policy meeting after holding them in the March and May meetings.

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