Pound (GBPUSD=X)

The pound strengthened against the dollar on Thursday morning, rising 0.1% to $1.2609, recovering some ground after a higher-than-expected reading for UK inflation.

The consumer price index (CPI) rose to 3% on an annual basis in January, according to data released on Wednesday by Office for National Statistics (ONS), which was above expectations of 2.8%.

Stronger inflation weakened the case for the Bank of England to deliver two more interest rate cuts this year.

Sanjay Raja, chief UK economist at Deutsche Bank (DBK.DE), said that following Wednesday's inflation data his team "continue to expect a sticky and bumpy path upwards over the next two quarters".

"While there remains significant uncertainty around the path of energy prices, we see CPI reaching a peak of 4.25% over the summer, before making its descent back to target in 2026," he said.

Read more: FTSE 100 LIVE: Stocks mixed as UK consumer confidence sinks to fresh low

He said that the inflation reading "lowers the likelihood of back-to-back rate cuts next month (March). Combined with the stronger labour market data [on Tuesday], strong GDP data last week, we think the MPC will be more comfortable waiting for more data to assess the demand and supply imbalances in the economy before dialling down restrictive policy further."

"The risk? As we’ve highlighted for some time, we think the main risk now is that the MPC refrains from any rate cuts until the summer, given the likely push higher in headline CPI, lifting inflation expectations," Raja added.

Sterling was also higher against the euro (GBPEUR=X) on Thursday, rising nearly 0.2% to €1.2086.

Gold (GC=F)

Gold prices surged to fresh highs on Thursday morning, amid concerns about US trade tariffs and geopolitics.

The spot price was up 0.7% at $2,953.95 per ounce at the time of writing, while gold futures jumped 1.2% to $2,970.80.

US president Donald Trump said on Tuesday that he would impose tariffs on autos "in the neighbourhood" of 25%, while for semiconductors and pharmaceuticals tariffs would be 25% "and higher, and it’ll go very substantially higher over a course of a year."

Meanwhile, Trump called Ukrainian president Volodymyr Zelenskyy a "dictator" in a social media post on Wednesday.

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This came after Zelenskyy said earlier in the day that US proposals on Ukrainian minerals were "not a serious conversation".

Zelenskyy had said earlier in the week that Trump was "living in a disinformation space", which came as the US and Russia met in Saudi Arabia this week to hold peace talks about the war in Ukraine, without representatives from Kyiv.