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 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.”
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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.
Meanwhile, the pound was little changed against the euro (GBPEUR=X), trading at €1.2045 on Tuesday morning.
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.
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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.
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, US West Texas Intermediate (WTI) crude declined 0.4% to $73.27.
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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.