Pound (GBPUSD=X)

Sterling was little changed against the dollar at $1.3054 in early European trading, near last week’s one-month low of $1.3011.

“GBP/USD may no longer track the positive slope in the moving average as the Bank of England (BoE) shows a greater willingness to further unwind its restrictive policy, and data prints coming out of the UK may sway the central bank plans to ‘decide the appropriate degree of monetary policy restrictiveness at each meeting,” David Song, strategist at forex.com, said.

Read more: FTSE 100 LIVE: Markets mixed as bets on UK interest rate cut ramp up

The pound has emerged as 2024's best-performing major currency, largely due to the BoE's cautious approach to interest rate cuts. However, a key risk to the pound's upward trend lies in a potential acceleration of these cuts, contingent on forthcoming economic data.

On a more positive note, sterling managed to gain some ground against the euro (GBPEUR=X), rising 0.2% to €1.1988 at the time of writing. This increase followed a report from the Office for National Statistics (ONS) indicating that wage growth met expectations, along with a decline in the UK unemployment rate.

Gold (GC=F)

Gold prices were basically muted on Tuesday as the US dollar remained robust, with investors keenly awaiting insights into the Federal Reserve's future interest rate policy.

At the time of writing, spot gold was trading at $2,651.63 per ounce, reflecting a modest increase of 0.3%. Meanwhile, US gold futures were flat at $2,666.40.

Despite this, resilience appears to be the overarching narrative for gold, as the precious metal remains close to its recent record highs, according to Yeap Jun Rong, a market strategist at IG. “The yellow metal is holding strong even in the face of dollar strength,” he said.

Read more: Gold not glittering for UK investors despite price surge

Looking ahead, the uncertainty surrounding the US elections could push demand for gold as a safe-haven asset. Yeap suggested that anticipated Fed rate cuts, likely in increments of 25 basis points, could propel gold prices to new heights, potentially targeting $2,800 by the end of the year.

Federal Reserve governor Christopher Waller has urged "more caution" regarding rate cuts, while Minneapolis Fed president Neel Kashkari said that further reductions are likely as the central bank approaches its 2% inflation target.

Current market sentiment reflects an 87% probability of a 25-basis-point cut in November, which could enhance the appeal of non-yielding bullion as lower interest rates typically boost gold's attractiveness.