The pound was down against the dollar on Monday morning, slipping 0.2% to $1.3619, as traders awaited news of the tariff “deals and letters” which Donald Trump said he will issue later today.
Trump warned overnight that he will impose a new 10% tariff on any country that aligns itself with the Brics group of developing nations, claiming they are “anti-American”.
The warning comes as the US finalises trade deals with a number of partners, while Washington is expected on Monday to begin informing other trade partners of the tariffs it has settled on. They will be implemented from 1 August, according to the president.
“The 90-day US tariff pause began on 2 April and is set to expire on Wednesday, leaving markets uncertain about what comes next. Trump announced on Sunday that the higher tariffs are set to take effect on 1 August, but countries without a bilateral deal will be notified by the 9 July deadline,” said Shane Strowmatt, an analyst at LGT, a private bank.
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Brics is a grouping that includes Brazil, China, Russia, South Africa and India.
The US Dollar Index (DX-Y.NYB), which tracks the greenback against a basket of six major currencies, was steady at 97.19.
In other currency moves, the pound was basically flat against the euro, at €1.1585 at the time of writing.
Gold prices lost ground in early European trading, pressured by a steady US dollar and tempered investor expectations of imminent interest rate cuts by the Federal Reserve.
Gold futures retreated 0.8% to $3,316.20 an ounce, while spot gold lost 0.7% to $31253 per ounce.
The pullback followed stronger-than-expected US employment data last week and a postponement of a US tariff deadline.
The prospect of renewed trade tensions provided limited support for safe haven assets, as Trump deferred his proposed tariff implementation deadline to 1 August, rather than 9 July as initially suggested.
Analysts said gold prices were more directly weighed down by the dollar, which held on to most of its gains from last week. The greenback was buoyed by last week's robust non-farm payrolls report, which showed continued strength in the US labour market.
However, the dollar’s biggest point of support was a sharp scaling back in expectations that the Federal Reserve will cut interest rates at its next two meetings.
Data from the CME FedWatch tool showed traders largely unwinding bets on a July rate cut, and increasingly their positions for the Fed to hold steady in September. Higher interest rates typically support the dollar and weigh on non-yielding assets like gold, which is priced in dollars.
