Pound (GBPUSD=X)

The pound has managed to stem losses, trading flat at $1.2217 in early European trading after facing a sharp sell-off in the last few trading days due to rising yields on UK gilts.

Goldman Sachs has said the sterling can steady from here, despite the risks. "While we acknowledge the wider distribution of risks, in our central view we are more inclined to push back on the extent of this week’s Sterling sell-off rather than to chase it further," says Kamakshya Trivedi, analyst at Goldman Sachs in London.

The pound regained its footing as UK government bonds showed signs of stabilising, with yields on 10-year UK government bonds, down three basis points at 4.86%. Yields on long-dated gilts also edged lower, down four basis points at 5.4%.

However, sterling continues to face challenges after a turbulent period, having recently plunged to a 14-month low.

Read more: Should Shein be allowed to list on the UK stock market? Have your say

Kathleen Brooks, research director at XTB, said: “UK asset prices face a tough test this week.

“Later this morning there is a £1bn sale of 30-year debt, the latest reading of CPI is released on Wednesday, there’s monthly GDP for November on Thursday and further debt sales out to the end of January.

“The chancellor is set to speak in the House of Commons on Tuesday, ostensibly about her trip to China, but she will likely be pressed on the sell-off in the pound and in UK bonds.

“So far, the Treasury have been keen to under play the relentless rise in UK bond yields, but the question is can she avoid the tough questions as she comes back to face the music?”

The pound was down by 0.1% against the euro (GBPEUR=X), trading at €1.1899.

Gold (GC=F)

Gold prices were mixed this Tuesday morning amid expectations the US Federal Reserve will proceed with caution with cutting interest rates this year.

The spot price lost 0.6% to $2,673.10 per ounce, while gold futures rose by 0.3% to $2,686.70 per ounce.

The stronger-than-expected US nonfarm payrolls (NFP) report has reinforced expectations that the Fed may pause its rate-cutting cycle later this month. This, in turn, has kept US Treasury bond yields elevated near their highest levels in over a year, with the US dollar also hovering close to a two-year peak. These factors are putting pressure on gold, a non-yielding asset.

"We had a better-than-expected US job report which strengthened the US dollar and the Treasury yields... (Gold's) move lower here is some follow-through on the stronger than expected report," Bob Haberkorn, senior market strategist at RJO Futures, told Reuters.