The pound initially fell against the US dollar and euro on Monday morning as fears about the potential economic impact of the spreading coronavirus pushed investors towards perceived safe-haven currencies such as the US dollar.

Sterling has enjoyed a strong run recently off the back of encouraging economic data releases and speculation the new Chancellor of the Exchequer, Rishi Sunak a former Goldman Sachs banker, will announce an increase in spending at his first budget next month.

However, the gains have been capped as trade talks between the EU and UK, which could kick-off as early as next week has taken the wind out of the pound’s sails as both sides have taken a particularly hard stance since the UK officially left the EU on January 31st.

GBPUSD fell from a morning high of 1.2947 to a low of 1.2893 around lunchtime but recovered in the afternoon to finish the day at 1.2924 as investors shifted their stance back.

GBPEUR climbed early in the morning to a high of 1.1975 but fell as the London markets opened to 1.1913 with further declines seen later in the session the pair dropped to a session low of 1.1892.

In the US, the Treasury Secretary Steven Mnuchin said the coronavirus outbreak won’t affect the Phase 1 trade deal with China for now but said that could change as more economic data is released.

EURUSD rose slowly for the majority of the day from an early morning low of 1.0811 to eventually hit a high of 1.0871 shortly after the European session ended.

Later today the Federal Reserve’s Vice President Richard Clarida is speaking, investors will be waiting to see the Fed’s latest stance on the outbreak. Recently there have been suggestions the Fed may announce an interest rate cut to help prevent any slowdown to the US economy.