Pound (GBPUSD=X, GBPEUR=X)

The pound moved higher against the dollar in early European trading on Wednesday, up 0.4% to $1.2795. The greenback fell to a six-month low as investors questioned whether the world’s biggest economy would fall into recession.

The dollar extended its losses, with the dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, losing 0.6% to 102.31, its lowest point in half a year.

Lee Hardman, a senior currency analyst at MUFG, said: "The unfavourable price action has cast some doubt on the safe haven status of the US government bond market and the US dollar at a time when the global trade war is intensifying.

"We expect foreign exchange market volatility to remain elevated in the near-term and continue to expect the traditional safe-haven currencies of the yen and Swiss franc to outperform."

Read more: FTSE 100 LIVE: Stocks plunge into the red as Trump’s 104% China tariffs take effect

Markets fear the US might be heading into a recession as Trump imposed the highest US tariffs since the early 20th century. US Customs and Border Protection confirmed that it is prepared to begin collecting country-specific tariffs from 86 trade partners. The “liberation day” import duties came into full effect at 5am London time.

In other currency moves, sterling was down 0.12% against the euro, trading at €1.1624. The single currency has found some support as the European Commission considers slapping tariffs of up to 25% on a broad range of exports from the US worth around €22.1bn (£19bn) based on the EU’s 2024 imports.

The list features agricultural and industrial commodities such as soybeans, meat, tobacco, iron, steel and aluminium, according to an internal document seen by POLITICO.

Most of the tariffs would apply from 15 May, unless blocked by a large majority of member states.

Gold (GC=F)

Gold prices climbed as US tariffs came into effect, including a huge 104% levy on Chinese goods, with the bullion buoyed by its safe-haven appeal and a weaker dollar.

Gold futures gained 2.3% to $3,059.40 per ounce at the time of writing, while the spot price rose 1.2% to $3,043.01 an ounce.

"The downward shift in the dollar on tariff worries effectively paved the way for gold to reclaim the $3000 level," KCM Trade chief market analyst Tim Waterer said.

"Due to global growth and inflation uncertainties, gold is still on track to pursue new all-time highs despite experiencing a few bumps in its progress over the last week."

Read more: Should you buy gold as Trump tariffs sparks surge in demand?