The pound moved higher against the dollar in early European trading, trading just below $1.26, after registering its best week of the year.
The currency’s upward movement was spurred by a positive UK Gross Domestic Product (GDP) report and disappointing US retail sales data. The dollar’s weakness was further compounded by a general market shift, as US markets remain closed on Monday for President’s Day.
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Additionally, analysts noted that growing concerns over tariffs were having less of an impact on investor sentiment.
“It seems that each successive tariff announcement seems to be having less of an impact on markets,” analysts at Lloyds said. “Markets seemed more interested in Trump’s announcement that he had talks on Ukraine with Russian leader Putin.
“That has helped drive a bounce in both the euro and sterling against the dollar to their highest in around three weeks, despite there being little indication that these talks will produce a concrete outcome.”
Meanwhile, sterling was even higher against the euro (GBPEUR=X) on Monday morning, at €1.20.
Gold prices gained ground on Monday, buoyed by a weaker US dollar following disappointing retail sales data for January. Investors are also awaiting further details on president Donald Trump’s reciprocal tariff plans, which could escalate the risk of a global trade war.
The spot price of gold rose 0.6% to $2,900.91 per ounce, while gold futures climbed 0.4% to $2,911.60.
The dollar index remained near a two-month low, reflecting the impact of the weaker-than-expected retail sales data for January.
A softer dollar typically makes gold more attractive to holders of other currencies. “Gold is being supported by the dollar’s weakness and uncertainty over how Trump will engage with major trading partners in enforcing his tariff policy,” said Kelvin Wong, senior market analyst for Asia Pacific at OANDA.
Trump renewed his tariff threats on Friday, announcing that levies on automobiles could be imposed as early as April 2. This came shortly after he instructed officials to explore reciprocal tariffs against countries that impose duties on US goods.
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The World Gold Council (WGC) in its forecast for 2025 predicts moderate yet positive growth for gold prices.
“Upside could come from stronger-than-expected central bank demand, or from a rapid deterioration of financial conditions leading to flight-to-quality flows,” it said in its Gold Outlook 2025 report.
Oil prices edged higher as investor followed developments in potential peace talks between Russia and Ukraine, which could ease sanctions that have disrupted global supply flows.
Brent crude futures rose 0.4%, reaching $75.03 per barrel, while US West Texas Intermediate (WTI) crude climbed 0.3%, to $70.93 per barrel.
The market’s focus remained on the progress of peace negotiations, especially after Trump and administration officials announced they had begun discussions with Russia aimed at ending the war in Ukraine.
“If negotiations lead to a resolution, more Russian barrels would enter global supplies, which could significantly impact oil prices negatively,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“Despite bearish developments, the near-term for oil looks somewhat supported by positive signs on the demand side.”
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Trump expressed optimism on Sunday, stating he believed he could meet “very soon” with Russian president Vladimir Putin to discuss ending the conflict in Ukraine.
The oil market has been volatile, swinging between uncertainty over Trump’s tariffs — some of which were later reversed — and the threat of sanctions on producers.
“Sentiment in the oil market continues to sour with weakness in the flat price, while timespreads are also pointing towards a weaker physical market,” said Warren Patterson, head of commodities strategy at ING Groep NV.
A potential peace deal could pave the way for lifting Western sanctions on Russia, theoretically boosting the global supply of Russian oil. However, the European Union has consistently indicated its intent to continue tightening sanctions on Russian energy, and it is likely that this pressure would persist even if a peace agreement is reached.
In broader market movements, the FTSE 100 (^FTSE) was higher on Monday morning, advancing 0.2% to 8,745.73 points. For more details, check our live coverage here.
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