The pound was weaker against the dollar in early European trade, losing 0.1% to $1.2297, amid mounting fears over the UK economy as consumer confidence fell to a new low.
According to the British Retail Consortium, expectations for the state of the economy plunged to fresh lows. Half of consumers expected the situation to worsen, and only one-in-six predicted an improvement in the nation’s growth.
The industry group’s chief executive Helen Dickinson said: “As the government warns of tough times ahead, it is little surprise that the public have caught the January blue.
Read more: FTSE 100 LIVE: Stocks muted as UK consumer confidence slumps to fresh low
“Expectations of retail spending and wider spending both fell significantly, though much of this is likely to be the end of the Christmas period, as people tightened their belts for the new year ahead.”
However, Dhaval Joshi, chief counterpoint strategist at BCA Research, claimed an “over-pessimism” toward the UK and that investors should buy the pound and British bonds.
“Another way of playing over-pessimism in the UK is to go long GBP/USD, which is also oversold based on its collapsed 65-day complexity,” he said.
Sterling was higher against the euro (GBPEUR=X), up by 0.1% to €1.1831.
Gold prices were muted on Thursday, hovering near three-month highs as the dollar faced renewed pressure following Trump’s decision to delay the immediate imposition of tariffs at the start of his second term.
The spot price was flat at $2,753.58 per ounce, while gold futures retreated 0.4% to $2,760.60 per ounce.
“It’s just a technical pullback because the dollar has been taking back on $108 level, triggering some profit-booking, but the undertone for gold is expected to be positive,” said Ajay Kedia, director at Kedia Commodities in Mumbai, according to Reuters.
Trump has floated potential 25% tariffs on Mexico and Canada and a 10% levy on Chinese imports beginning 1 February. He also suggested duties on European goods, though he provided no further details.
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Market watchers are weighing the potential inflationary impact of Trump’s trade policies on gold. “How Trump’s policies impact gold is whether the combination of tax cuts, deregulation, tariffs, and deportation will amount to a strong inflationary push,” said Ilya Spivak, head of global macro at Tastylive.
“If so, Fed rate cuts will be limited, and gold is likely to struggle,” Spivak added.
Oil prices remained steady on Thursday as investors weighed the potential impact of Trump’s proposed tariffs and energy policies on global economic growth and energy demand.
