The pound edged higher against the dollar in early European trading on Tuesday, up 0.4% to $1.2769, bouncing back from the one-month low in the previous session as uncertainty grows around global trade policy and fears mounted of a recession triggered by US president Donald Trump’s tariffs.
At close: 12 April at 17:26:38 BST
The dollar extended its losses on Tuesday morning, with the dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, losing 0.4% to 102.90.
Traders have ramped up bets that the US Federal Reserve (Fed) will cut interest rates earlier this year to offset fears of potential US economic recession. According to the CME FedWatch tool, traders are almost certain that the central bank will resume its monetary policy easing cycle in the June policy meeting, which it paused in January.
“I think this set-up is just plain awful for sterling – a huge debt pile on stretched fiscal limits and pinning all hope on a dramatic increase in growth and productivity – Starmer is right to be worried,” says Laoise Ni Thighearnaigh, a trader on the FX desk at JP Morgan, said.
“The push and pull of anti-US exceptionalism USD supply, and hair-on-fire risk-off USD demand, is incredibly hard to navigate, so we are keeping our GBP shorts against EUR and JPY,” she added.
Read more: FTSE 100 LIVE: Stocks rebound following punishing day in markets amid Trump tariff turmoil
Trump upended the world economy last week with sweeping tariffs that have raised fears of an international recession and triggered criticism even from within his own Republican Party.
As the trade war escalates, Beijing – Washington’s major economic rival – unveiled its own 34% duties on US goods to come into effect on Thursday. Trump has now threatened fresh levies of 50% on imports from the world’s second-largest economy.
IG market analyst Tony Sycamore commented: “Things have gone from bad to worse.”
At close: 11 April at 22:29:35 BST
In other currency moves, sterling was down 0.1% against the euro, trading at €1.1650, with the single currency drawing support from cautious investors amid persistent global uncertainty.
Gold prices rebounded on Tuesday from a near four-week low reached in the previous session, as escalating concerns over a global trade conflict spurred heightened demand for safe-haven assets.
As of 11 April at 16:59:59 GMT-4. Market open.
Gold futures climbed 1.8% to $3,028.00 per ounce at the time of writing, while the spot price rose 0.1% to $3,012.76 an ounce.
“Escalation of the trade war could trigger a global recession, and that is driving safe-haven demand,” said a senior analyst at Reliance Securities, Jigar Trivedi.
