Pound (GBPUSD=X)

Sterling was again lower against the dollar, slipping 0.2% to 1.3079 at the time of writing, just above the three-week low touched on Monday.

The dollar has been pushed higher as investors were disappointed in China’s reluctance to introduce further stimulus. Markets had anticipated additional fiscal measures to support the country’s ailing economy but were met with a lack of action, compounded by ongoing geopolitical tensions in the Middle East. This prompted a flight to safer assets, such as the dollar.

“GBP/USD dropped to the 55-day simple moving average (SMA) at $1.3066 which acted as support and so far held. Were it to give way, the September low at $1.3002 would be next in line,” Alex Rudolph, senior technical analyst at IG, said.

“This support level with the $1.30 mark is key for the medium-term trend as a fall through it could lead to the 200-day SMA at $1.2784 being back in sight.”

Meanwhile, the pound remained largely subdued the previous session, amid growing concerns ahead of the upcoming autumn budget. Traders are getting worried that rising borrowing costs could limit chancellor Rachel Reeves’ ability to fund critical infrastructure projects and other initiatives aimed at stimulating economic growth.

Read more: FTSE 100 LIVE: European markets mixed and China stocks plunge as stimulus measures disappoint

Matthew Ryan, head of market strategy at global financial services firm Ebury, said: “The pound has failed to bounce back following last week’s surprisingly dovish remarks from Bank of England governor Bailey, with the GBP/USD exchange rate hovering around its lowest level in three weeks on Tuesday.

“Recent UK economic data has been somewhat disappointing, but sterling bulls will be hoping for a reversal in this trend when the August GDP print is released on Friday morning.

Sterling was also lower against the euro (GBPEUR=X) in early trading, slipping 0.1% to €1.1925.

Gold (GC=F)

Gold’s shine appears to be fading as the precious metal slipped once again in early European trading as investors lowered their expectations for another Federal Reserve jumbo cut.

At the time of writing, spot gold was down 1.5% at $2,613.66 per ounce, while US gold futures slipped 0.1% to $2,633.40.

According to the CME FedWatch tool, the market has largely priced out the possibility of a 50-basis-point reduction at the Fed's November meeting following last week's robust jobs report. Current expectations lean towards an 87% likelihood of a 25-bps cut instead. As a result, gold is on track for its largest decline in over a month.

David Meger, director of metals trading at High Ridge Futures, told Reuters: "The last couple of days have seen a retracement due to a change in outlook regarding interest rates." He added that rising bond yields have muted expectations for extensive future rate cuts.

Read more: More than ￡1bn wiped off housebuilder Vistry's value after profit warning

Looking ahead, US inflation data set to be released on Thursday is expected to show a continued decline in price pressures. However, analysts from Commerzbank indicated that this is unlikely to reignite speculation about stronger Fed rate cuts, suggesting that any upward movement in gold prices may be more closely tied to geopolitical risks.

Gold is reputed for its stability as a favoured hedge against geopolitical and economic risks.

Oil (BZ=F)

Oil prices rose on Wednesday as developments in the Middle East overshadowed cautious demand expectations and ahead of a key Chinese fiscal policy meeting.

Brent crude futures rose 0.8% to $77.85 a barrel, while US West Texas Intermediate (CL=F) crude climbed 0.6% to $74.07 per barrel during early European trading.

Prices had dropped over 4% in the previous session due to speculation about a potential ceasefire between Hezbollah and Israel. However, concerns linger about possible Israeli attacks on Iran's oil infrastructure.

Priyanka Sachdeva, senior market analyst at Phillip Nova, said that the market is caught in a cycle of reacting to "Middle Eastern headlines," distracting investors from underlying fundamentals.

Read more: Stocks to watch ahead of the October budget

OANDA’s Kelvin Wong predicts a sideways trading pattern for oil, with WTI expected to remain between $73.15 and $78.30 per barrel as the market awaits clarity on fiscal stimulus and Middle Eastern developments.

In terms of demand, recent data revealed a significant rise in US crude oil stocks, increasing by nearly 11 million barrels last week, although fuel stockpiles declined.

Meanwhile, the FTSE 100 (^FTSE) was higher at the open, climbing 0.4% to 8,226 points. For more details check our live coverage here.

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