US Treasury Secretary Steven Mnuchin told Trump on Thursday that more sanctions were ready if Brunson were not freed.
The lira has lost almost 40pc of its value against the dollar this year, sparking a sell-off in emerging market currencies and weighing on global stocks.
The Turkish lira has been in a steady slide and reached an all-time low earlier this week.
The United States will take further action against Turkey if it continues to detain American pastor Andrew Brunson, Treasury Secretary Steven Mnuchin said Thursday in a sign that tensions between the North Atlantic Treaty Organisation allies will continue to escalate over the issue.
He also urged Brunson to serve as a "great patriot hostage" while he is jailed and criticized Turkey for "holding our wonderful Christian Pastor".
One currency trader said Friday's lira weakness was driven by "the new USA sanctions threat and the S&P decision, with position-closing in markets ahead of the public holiday". Brunson, who has lived in Turkey for over twenty years and led a small church in the southwestern coastal town of Izmir, was jailed for almost two years following the failed 2016 coup.
"American sanctions will have no effect on us as long as we remain united", said another man, Ibrahim Aktar.
Brunson is charged with spying for the PKK - a designated terrorist group in the United States and Turkey - and the Fetullah Terrorist Organization (FETO), the group behind the defeated July 2016 coup attempt in Turkey during which 251 people died and thousands were injured.
Turkish President Tayyip Erdogan announced yesterday that the country would boycott all electronics from the U.S. amid tension and rising conflict between the two countries and its leaders.
"We will turn this crisis into an opportunity", said Erdogan's spokesman Ibrahim Kalin after a cabinet meeting chaired by the president, saying measures taken so far had helped bring about a "rapid improvement process" over the last two days.
Last Friday, U.S. President Donald Trump upped the ante by doubling U.S. tariffs on Turkish aluminum and steel imports.
U.S. sanctions and the declining lira created panic in the markets but on the streets, many Turks appeared to support the government's retaliatory measures. The lira's sharp decline has sparked fears in the worldwide community of a Turkish economic crisis.
The lira has plunged as investors fret about Erdogan's influence over monetary policy.
However, it is not just Turkey that has something to lose in this crisis. The envoy also underlined that they have their full trust in Turkey.