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.

Oil (BZ=F)

Oil prices have experienced their sharpest decline in a month following reports that Israeli prime minister Benjamin Netanyahu assured US president Joe Biden that Israel would not retaliate against Iran’s crude or nuclear facilities in response to a recent missile attack.

Brent crude futures fell by 3.6%, settling at $74.62 a barrel, while US West Texas Intermediate (WTI) (CL=F) crude dropped 3.97% to $70.90 per barrel during early European trading. This decline came after the Washington Post reported Netanyahu's commitment to focus on Iran's military rather than its oil and nuclear sectors.

The sell-off was compounded by concerns over China's economic outlook, particularly after Beijing failed to announce any new stimulus measures during a weekend briefing.

Kathleen Brooks, research director at XTB, noted the recent volatility in oil prices, which have been influenced by ongoing tensions in the Middle East. “The latest news suggests that Israel will not directly target Iran, leading to a reduction in the escalation premium that had been priced into oil,” she explained.

Brooks also warned that this development could negatively impact oil companies listed on the FTSE 100, which may see further declines in the energy sector following its performance as one of the weakest market segments on Monday.

Meanwhile, the FTSE 100 (^FTSE) was lower at the open, slipping 0.1% to 8,281 points. For more details check our live coverage here.

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