The pound recovered some its losses on Tuesday after having dropped on the back of a potential rate cut. Weak economic data has increased the probability of the Bank of England cutting rates at the end of this month. With some analysts quoting 43% chance of a 0.25% cut occurring by the end of this month. The pound gained 0.1% against the dollar and 0.2% against the euro.

Investors are beginning to see the risk of Sterling downside increasing a lot over the course of this year with economic weakness and the pressure of EU negotiations creating enough uncertainty to cap any recent gains.

GBPUSD opened at 1.2978 and gained steadily across the day, closing at a high of 1.3016

GBPEUR opened at 1.1648 and performed similarly, closing near a high of 1.1697

The Swiss franc hit a three-year high against the euro on Tuesday after President Donald Trump accused Switzerland of being a currency manipulator. The euro dropped nearly 0.5% as investors deemed further intervention from the Swiss National Bank to lower the value of the currency as less likely.

The Japanese yen recovered some if its earlier losses as risk appetite reduced after news that thus will keep certain tariffs in place on Chinese goods during the election period. The Chinese yuan also fell against the dollar. Though a deal is expected to be signed today, the tariffs will remain in place for at least 10-months.

More recently, safe-haven currencies had made losses on a generally more favourable outlook for trade negotiations which has been a relief for investors hoping for an improvement in global economic growth.
The dollar also made gains against the euro as year-end rebalancing that had benefitted the euro continues to be unwound. The next major data release will be retail sales due tomorrow.

EURUSD opened at 1.1140 and fell a to an early afternoon low of 1.1109 before recovering to close only slightly lower at 1.1131