Market News

Pound 

The pound fell against the dollar in early European trading on Monday, slipping 0.2% to $1.2453, with investors trying to navigate the uncertainties of US president Donald Trump's trade tariffs plans.

Sterling fell against a stronger dollar, after a US-Colombia trade war was averted. Trump had ordered an emergency 25% tariff on Colombia over its refusal to allow two US military deportation planes to land in the country.

However, in the early hours of Monday morning, the US suspended its tariff threat after Colombia agreed to grant entry to the flights.

Jim Reid, market strategist at Deutsche Bank (DBK.DE), said: "This 12-hour incident feels like a template for how the US will now deal with its foreign policy issues."

Investors will also be looking ahead to central bank interest rate decisions this week, with the US Federal Reserve due to announce its decision on Wednesday, followed by the European Central Bank (ECB) on Thursday.

In the case of the Fed, Reid said Deutsche Bank economists "expect a relatively quiet meeting with no rate move and limited guidance about future policy decisions."

"When asked about Mr Trump’s policies and their impact on inflation, expect Powell to play a straight bat and say that the committee wont prejudge policies in advance," he said.

Meanwhile, he said that Deutsche Bank economists expect the ECB to deliver another 25 basis-point cut on Thursday, which would take the policy rate to 2.75%.

The pound was flat against the euro (GBPEUR=X) on Monday morning, trading at €1.1879.

Gold (GC=F)

Gold prices retreated on Monday morning, coming under pressure as the dollar strengthened.

The spot price was down 0.5% to $2,757.74 per ounce, while gold futures fell 0.6% to $2,762.50.

A stronger dollar tends to weigh on gold prices because the precious metal is dollar-dominated.

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Expectations that the Fed will keep interest rates on hold this week was another headwind for gold, as higher rates make the precious metal less appealing to investors, given it is a non-yielding asset.

"The US dollar could be the main culprit for gold's weakness ... However, the current movement suggests that the downside for the yellow metal is still limited, potentially aided by safe-haven flows," said IG market strategist Yeap Jun Rong, according to a Reuters report.

Oil (BZ=F, CL=F)

Oil prices were flat on Monday morning, following Trump's repeated calls for the Organization of the Petroleum Exporting Countries (OPEC) to lower prices.

Brent crude futures were little changed at $78.43 per barrel, while US West Texas Intermediate (WTI) crude was trading at $74.59 per barrel.

Trump said in a speech made remotely to the World Economic Forum in Davos on Thursday that he was going to ask OPEC – which is led by Saudi Arabia – to bring down oil prices.

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The US president then repeated this call on Friday, saying it would help bring an end to the Russia-Ukraine war.

"One way to stop it quickly is for OPEC to stop making so much money and drop the price of oil ... That war will stop right away," he said.

Susannah Streeter, head of money and markets at Hargreaves Lansdown (HL.L), said that the "uncertainty about future US policy and the impact on the global economy is ... weighing on oil prices."

In broader market movements, the FTSE 100 (^FTSE) fell on Monday morning, down 0.2% to 8,489 points. For more details, check our live coverage here.