Pound (GBPUSD=X, GBPEUR=X)

The pound edged higher against the dollar in early European trading, up 0.1% to $1.2915, as investors moved out of the greenback over concerns about a recession in the world’s largest economy.

Investors poured into safe havens like the yen and Swiss franc overnight and heavily sold the risk-sensitive Australian dollar.

“Things have gone from bad to worse,” said Tony Sycamore, a market analyst at IG.

“If there isn’t some sort of walking back of the announcements, then we’re heading for a liquidity event and liquidity will get sucked out of these markets big time across all asset classes.”

Rodrigo Catril of National Australia Bank warned that “given the US is at the epicentre of the trade war, the USD has been suffering from outflows” with investors “looking ... to diversify away from US assets”.

Read more: FTSE 100 LIVE: Stock markets plummet as Trump’s tariffs stoke global recession fears

The dollar extended its losses on Monday morning, with the dollar index (DX-Y.NYB), which measures the greenback against a basket of six currencies, losing 0.7% to 102.32.

In other currency moves, sterling was down 0.4% against the euro, trading at €1.1708.

“The sharp spike in the VIX has overshadowed the pound’s larger resilience to tariffs – evidenced in the lower UK tariff rate – resulting in EUR/GBP trading much cheaper than rate differentials imply,” said Themistoklis Fiotakis, global head of FX research at Barclays

“We assess this to be a temporary bump and expect the pound to rebound vs. the EUR as equity volatility subsides,” he added.

Gold (GC=F)

Gold prices have retreated from their all-time highs, with profit-taking dimming the lustre of the precious metal.

Gold futures fell 0.1% to $3,032.80 per ounce at the time of writing, while the spot price declined 0.5% to $3,024.06 an ounce.

The yellow metal had soared to consecutive record highs last week but pulled back after the announcement of new tariffs by US president Donald Trump.

“Even gold – traditionally a safe haven – tumbled from a record high it had reached earlier last week as investors sold off the precious metal along with other asset classes to cover losses elsewhere,” ING analysts said in a note.

Despite gold’s reputation as a safe haven, its decline comes amid broader risk-off sentiment, with traders weighing the potential consequences of sweeping tariffs.

Read more: The FTSE 100 companies that could come out best after Trump's tariffs

“We tend to see gold as a liquid asset being used to meet margin calls elsewhere, so it's not unusual for gold to sell off after a risk event given the role that it can play in a portfolio," said Suki Cooper, an analyst at Standard Chartered.