I am not sure what you mean.

I would be upgrading the 5400 rpm internal hard drive to an SSD.

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What is meant was that my laptop already has a 5400 rpm hdd installed. Now i want to use an external SSD. Will the internal slower hdd somehow limit/hinder the speed/performance of the external ssd when i'll use it?

Directly, no - the external drive operates independently of the internal.

You're system will still be running its operating system from the much slower internal drive, though - so an external SSD will do nothing to improve overall performance.

To do that, replace the internal drive with the SSD and use it as your boot device, moving the hard drive to external for added storage or backup.