Pound (GBPUSD=X, GBPEUR=X)

The pound climbed to its highest level against the dollar since September, buoyed by a broad sell-off in the US currency after Donald Trump renewed calls for the Federal Reserve to cut interest rates.

Sterling touched $1.342 on Tuesday morning before easing slightly to $1.3389 at the time of writing, as markets reacted to concerns over political interference in US monetary policy. The gains came amid speculation that Trump is exploring ways to remove Fed chair Jerome Powell from his post, a move that would risk further undermining confidence in the independence of the central bank.

The president, writing on Truth Social, attacked Powell for adopting a “wait and see” stance on monetary policy, warning that the US economy would falter unless the Fed acted swiftly to lower borrowing costs.

Trump’s remarks contributed to a decline in the US Dollar Index (DX-Y.NYB), which measures the greenback against a basket of six major currencies. The index slipped to 98.31, its lowest level since March 2022, as investors weighed the impact of renewed trade tensions between Washington and Beijing as well as the potential instability at the Fed.

Read more: FTSE 100 LIVE: Markets tepid as investors watch Trump-Fed spat with trepidation

Eric Kuby, chief investment officer at North Star Investment Management, said: “There’s this terrible stalemate there, and concern that there will be some sort of action taken to replace Powell, which would create a real panic in the dollar.”

Joseph Capurso of Commonwealth Bank of Australia commented: “The longer the speculation about the independence of US monetary policy continues, the longer the dollar is at risk of falling.”

Elsewhere in currency markets, the pound rose 0.2% against the euro, trading at €1.1628. The euro came under pressure following the European Central Bank’s widely anticipated decision to cut interest rates by 25 basis points, as investors' attention turned to warnings from ECB president Christine Lagarde over the potential impact of US trade policy on Eurozone growth.

While the rate reduction had been fully priced in by markets, Lagarde’s comments during the post-decision press conference raised fresh concerns about the economic outlook. The ECB chief cautioned that escalating trade tensions, particularly the threat of new US tariffs, posed a risk to the fragile recovery in the Eurozone.

Gold (GC=F)

Gold hit $3,500 per ounce for the first time this morning, extending a rally that has pushed bullion up from $2,623 an ounce at the start of this year.

Gold futures were up 1.6% to $3,478.90 per ounce at the time of writing, while the spot price had retreated from its new record to trade at $3,473.96 an ounce.