The pound fell 0.2% against a strengthening dollar (GBPUSD=X) to $1.3331 on Tuesday morning as investors looked to the latest round of trade talks between the US and China.
The US dollar index (DX-Y.NYB), which tracks the greenback against a basket of six currencies, was up 0.4% at 99.04, at the time of writing.
The US and China have restarted trade talks in Sweden led by Treasury secretary Scott Bessent representing Washington and vice premier He Lifeng for Beijing.
US commerce secretary Howard Lutnick said on Monday that a 90-day extension of the trade truce with China would be the “likely outcome” of the talks.
Tariffs remain in the spotlight after a US-EU trade deal was agreed on Sunday, which will see 15% duties imposed on many European exports to the US, less than the 30% that had been threatened by president Donald Trump.
Read more: Markets higher as attention turns to slew of earnings reports
European Commission president Ursula von der Leyen hailed the agreement as a “huge deal” that would bring “stability” and “predictability”.
However, the pact was met with a downbeat reaction from some European leaders, with Spanish prime minster Pedro Sánchez saying he would back the deal “without any enthusiasm”, while French prime minister François Bayrou described it as a “submission” in a post on X.
The pound was 0.2% higher against the euro on Tuesday, trading at €1.1535 at the time of writing.
Gold prices were steady on Tuesday morning, as investors kept an eye on trade talk developments.
Gold futures (GC=F) were little changed, trading at $3,312.80 per ounce at the time of writing, while spot gold edged 0.2% higher to $3,319.78 per ounce.
News of trade deals dented the appeal of gold as a safe haven asset, while a stronger dollar also weighed on the precious metal, given that it tends to be traded in the US currency.
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Meanwhile, UK stocks climbed on Tuesday on the back of positive trade news and some strong earnings from major FTSE 100 (^FTSE) companies.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “Investors took the EU’s expected 15% tariff move in stride, the latest indicator that this Trump administration is getting some big deals done, and any tariff war risk built into stock valuations has all but disappeared.
“Focus now shifts to China trade talks and a jam-packed week ahead, with a quarter of the S&P 500 index reporting earnings, a critical Fed decision, and no shortage of data poised to test the market’s nerve.”
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