Pound (GBPUSD=X)

Sterling was lower against the dollar, slipping 0.2% to $1.3025 in early European trading, after tumbling to a near two-month low against the greenback last week, following weaker-than-expected UK inflation data.

Sterling initially showed resilience, buoyed by positive domestic jobs data. Despite a slowdown in wage growth, an unexpected drop in the UK’s unemployment rate lent support to the currency early in the week.

However, the rally was short-lived. On Wednesday, the release of softer-than-anticipated inflation figures sent the pound sharply lower. The UK’s consumer price index (CPI) for September showed headline inflation easing from 2.2% to 1.7%, below market expectations of 1.9%, and significantly under the Bank of England’s (BoE) 2% target.

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The pound regained some ground on Thursday and Friday, helped by improved investor sentiment and surprisingly strong retail sales data. UK retail sales rose by 0.3% in September, defying predictions of a 0.3% contraction.

Despite the late-week recovery, GBP/USD was unable to fully recoup its mid-week losses, closing the period lower as concerns over subdued inflation weighed on sterling’s outlook.

Against the euro (GBPEUR=X), sterling also basically muted, trading at €1.2003.

Gold (GC=F)

Gold prices surged to an all-time high on Monday, continuing last week’s rally as rising geopolitical tensions and uncertainty surrounding the upcoming US presidential election boosted demand for safe-haven assets.

At the time of writing, spot gold was trading at $2,727.01 per ounce, after touching a record high of $2.732 during the Asia trading session. Meanwhile, US gold futures rose 0.6% to $2,745.90.

The rally was primarily driven by heightened safe-haven demand, with investors reacting to reports over the weekend that Israel was preparing a military response to Iran following a missile strike earlier in the month. Ongoing hostilities between Israel, Hamas, and Hezbollah added to the tensions, further supporting gold prices.

Additionally, traders turned cautious ahead of the US elections in early November, with polls indicating a tightly contested race. Analysts at ANZ suggested that the election outcome remained "too close to call", adding to the overall sense of uncertainty in the markets.

Read more: UK house prices rise but most owners are pricing to sell

Expectations of interest rate cuts also supported gold. In the US, market participants are pricing in a 92.6% likelihood of a Federal Reserve rate cut in November, according to the CME FedWatch tool. Meanwhile, the European Central Bank lowered rates by a quarter point last week.