Pound (GBPUSD=X)

Sterling edged 0.2% higher against the dollar to $1.3007 on Tuesday as traders awaited crucial guidance on the trajectory of UK interest rates from Bank of England (BoE) governor Andrew Bailey, who is scheduled to deliver a speech later on Monday.

However, further gains for the pound were tempered by growing investor caution ahead of the UK's autumn budget, set to be unveiled on 30 October. Markets are particularly concerned about reports that chancellor Rachel Reeves is preparing to announce a series of tax hikes as the Treasury warned of difficult decisions after a September borrowing rise.

This fiscal uncertainty is weighing on sentiment, with traders remaining vigilant as potential shifts in monetary and fiscal policy come into focus.

Read more: UK borrowing for September was third highest on record in blow for Rachel Reeves

Bailey’s speech is expected to be a key market driver. Should the BoE governor signal that the central bank is prepared to cut interest rates aggressively, assuming inflation continues to ease, the pound could come under renewed pressure.

Adding to the broader uncertainty, the UK's significant budget release is just nine days away, while the US faces a contentious presidential election in 15 days. Both events are expected to shape the outlook for GBP/USD exchange rates, as well as affect sterling and the dollar against other currencies, including the euro.

Against the euro (GBPEUR=X), sterling was basically muted, trading at €1.2011.

Gold (GC=F)

Gold prices climbed on Tuesday, hovering near record highs as investors sought safety amid uncertainties surrounding the upcoming US presidential election, rising tensions in the Middle East, and expectations of interest rate cuts from central banks.

Spot gold was trading at $2,733.83 per ounce, while US gold futures inched up 0.1% to $2,750.30, at the time of writing.

The precious metal, widely regarded as a hedge against political and geopolitical risks, reached an all-time high of $2,740.37 on Monday. So far this year, gold has surged over 32%, reflecting sustained demand as global uncertainties mount.

Read more: FTSE 100 LIVE: European stocks mixed as UK government borrows ￡16.6bn in September

“A confluence of tailwinds remains in place,” said IG market strategist Yeap Jun Rong, citing gold’s appeal as a hedge against US election risks, ongoing geopolitical tensions, and resilient central bank demand. He noted that buyers are now eyeing the $2,800 level as election-related uncertainties intensify.

Richard Hunter, head of markets at Interactive Investor, said: "Global uncertainty has led to a long list of bullish drivers for the gold price, which has now risen by 34% so far this year and has set several new records along the way.