The pound was little changed against the dollar in early European trading on Thursday morning, at $1.2667, ahead of UK prime minister Keir Starmer's meeting with US president Donald Trump.

Starmer has arrived in Washington to meet Trump for the first time since the US president was inaugurated in January.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said Starmer "faces the supremely tricky task of trying to keep the US onside as a key NATO ally but demonstrate a stern enough demeanour to maintain support at home."

"He has a slightly stronger hand now, given the commitment to up military spending to 2.5% of GDP, with a pledge to raise to 3% during the next parliament but he may still be scolded for a lack of ambition," she said. "Given the fracturing of Western relations over the past week, amid Trump’s siding with Putin, maintaining military partnership will be the most urgent topic of discussion.

"While talk is likely to turn to trade, given Trump’s tariff threats still dangling over the world, making progress on an agreement for a UK exemption or even a future deal, is likely to be wishful thinking."

Investors were also weighing the latest comments on tariffs made by Trump on Wednesday.

Trump threatened to impose 25% tariffs on the European Union and while the president didn't offer much further detail, he said that the levies would be on "cars and all other things".

The European Commission reportedly said it would respond "firmly and immediately" to any new tariffs.

Sterling was also muted against the euro on Thursday morning, trading at €1.2094.

Gold prices fell on Thursday morning, with higher US Treasury yields weighing on the precious metal, while investors also await key US inflation data.

The spot price was down 1.2% to $2,881,42 per ounce, while gold futures fell 1.2% to $2,896.30 per ounce.

The benchmark 10-year Treasury yield inched slightly higher on Thursday morning to 4.302%. Higher yields on bonds, which are the rate of return for investors holding this debt, dampen the appeal of gold as a non-yielding asset.

Meanwhile, investors are looking ahead to the release of the latest US personal consumption expenditures (PCE) index on Friday, given it is the US Federal Reserve's preferred gauge of inflation.

According to a Reuters poll, the consensus forecast for the PCE monthly index is 0.3%, which would be the same as in December.