Pound (GBPUSD=X)
The pound recovered more ground against the dollar, following a sharp fall last week, rising 0.2% to $1.2537 in early European trading on Tuesday.
Sterling’s Resurgence
Sterling rose in Monday’s session following a report by the Washington Post that said advisers to US president-elect Donald Trump were considering a more limited set of trade tariffs that would be universal but would only apply to what are deemed critical imports.
However, Trump denied the report shortly after, writing on social media that the story ‘incorrectly states that my tariff policy will be pared back. That is wrong.’
Pound’s Reaction
The pound eased back slightly later in Monday’s session but has since risen back against the dollar, having been hurt by the greenback’s rise last week.
Sterling fell to an eight-month low of $1.2353 last week, as the greenback rallied on expectations of dollar-supportive policies from Trump when the former president returns to the White House later this month.
GBP/USD Rate
The pound was little changed against the euro (GBPEUR=X), trading at €1.2045 on Tuesday morning.
Gold (GC=F)
Gold prices rose on Tuesday morning, seeing some relief from weakness in the dollar amid the trade tariff confusion.
The spot price advanced 0.1% to $2,640.78 per ounce, while gold futures climbed 0.3% to $2,654.90 per ounce.
Gold prices had come under pressure from a stronger dollar, given that the precious metal is typically priced in the US currency.
Safe Haven Investment
However, investors tend to look towards safe-haven investments, such as gold, in times of geopolitical and economic uncertainty.
According to Reuters, IG market strategist Yeap Jun Rong said: ‘Gold prices have managed to stabilise amid some cooling off in the US dollar overnight, but higher US Treasury yields may remain a key overhang for further gains.’
While gold and bonds are both safe-haven assets, the precious metal is less appealing to investors as a non-yielding asset if interest rates remain higher.
Oil (BZ=F, CL=F)
Despite a softer dollar, oil prices continued to fall on Tuesday morning, on the back of weaker economic data, as well as continued demand concerns.
- Brent crude futures dipped 0.3% to $76.07 per barrel, while
- US West Texas Intermediate (WTI) crude declined 0.4% to $73.27.
Matt Britzman, senior equity analyst at Hargreaves Lansdown (HL.L), said: ‘Weak economic data from the US and Germany outweighed bullish signals like higher energy demand, a weaker dollar, and Saudi Arabia hiking prices for Asian buyers.’
With oversupply fears and demand jitters lingering, the market seems stuck in a balancing act, while traders keep an ear to the ground for geopolitical twists that could stir things up.
Broader Market Movements
In broader market movements, the FTSE 100 (^FTSE) dipped on Tuesday morning, edging 0.4% lower to trade at 8,218.14 points.
For more details, check our live coverage here.
Bitcoin’s $100k Record Rally and What to Expect of Crypto in 2025
What will happen to interest rates in 2025?
Download the Yahoo Finance app, available for Apple and Android.
Investors are eagerly awaiting the outcome of the UK-US trade negotiations, which could have a significant impact on the value of sterling.
The pound’s resilience against the dollar is also likely to be influenced by the Bank of England’s monetary policy decisions, particularly in light of the current economic uncertainty.
In the meantime, gold prices continue to rise as investors seek safe-haven assets during times of geopolitical and economic turmoil.
However, the precious metal remains less appealing to investors if interest rates remain higher due to its non-yielding nature.
Oil prices, on the other hand, are experiencing a decline despite a softer dollar, reflecting concerns over oversupply and demand jitters.
The FTSE 100 index is also trading lower on Tuesday morning, adding to the overall market volatility.
Key Statistics
- GBP/USD rate: $1.2537 (up 0.2% from last week’s low)
- Gold price: $2,640.78 per ounce (up 0.1% from Monday’s close)
- Oil prices:
- Brent crude futures: $76.07 per barrel (down 0.3%)
- US West Texas Intermediate (WTI) crude: $73.27 per barrel (down 0.4%)
Market Commentary
Sterling’s resilience against the dollar is likely to be influenced by the Bank of England’s monetary policy decisions, particularly in light of the current economic uncertainty.
The pound’s value may also be impacted by the UK-US trade negotiations, which could have a significant impact on the value of sterling.
Meanwhile, gold prices continue to rise as investors seek safe-haven assets during times of geopolitical and economic turmoil.
However, the precious metal remains less appealing to investors if interest rates remain higher due to its non-yielding nature.
Oil prices, on the other hand, are experiencing a decline despite a softer dollar, reflecting concerns over oversupply and demand jitters.
The FTSE 100 index is also trading lower on Tuesday morning, adding to the overall market volatility.
Investor Sentiment
Investors remain cautious about the global economy, with many seeking safe-haven assets such as gold during times of uncertainty.
However, some analysts believe that the precious metal may not be as appealing if interest rates remain higher due to its non-yielding nature.
Others are warning about the potential for oversupply and demand jitters in the oil market, which could lead to further price declines.
Economic Indicators
The Bank of England’s monetary policy decisions will likely have a significant impact on the value of sterling, particularly in light of the current economic uncertainty.
The UK-US trade negotiations may also influence the pound’s value, as well as the global economy as a whole.
Meanwhile, gold prices continue to rise as investors seek safe-haven assets during times of geopolitical and economic turmoil.
However, the precious metal remains less appealing to investors if interest rates remain higher due to its non-yielding nature.
Oil prices, on the other hand, are experiencing a decline despite a softer dollar, reflecting concerns over oversupply and demand jitters.
The FTSE 100 index is also trading lower on Tuesday morning, adding to the overall market volatility.
Conclusion
Sterling’s resilience against the dollar is likely to be influenced by the Bank of England’s monetary policy decisions, particularly in light of the current economic uncertainty.
The pound’s value may also be impacted by the UK-US trade negotiations, which could have a significant impact on the value of sterling.
Meanwhile, gold prices continue to rise as investors seek safe-haven assets during times of geopolitical and economic turmoil.
However, the precious metal remains less appealing to investors if interest rates remain higher due to its non-yielding nature.
Oil prices, on the other hand, are experiencing a decline despite a softer dollar, reflecting concerns over oversupply and demand jitters.
The FTSE 100 index is also trading lower on Tuesday morning, adding to the overall market volatility.
