USD: dollar stifled by political uncertainty and a steadying sterling

Sterling managed to hold onto its recent gains against the US dollar and even managed to strengthen further in spite of weaker-than-expected numbers from Britain’s dominant services industry. Although this represents a downbeat run of data that had seen the pound lose almost 3% against the dollar in August, concerns surrounding North Korea continue to exert influence and weaken the US dollar.

This has also supported the greenback remaining on the back foot against the euro and there is speculation that North Korea appears to have moved an intercontinental ballistic missile towards its west coast.

Yesterday saw a number of FOMC members speaking, with Federal Reserve Governor Lael Brainard arguing that US interest rates could rise more slowly than expected. Although she is known for her dovish tone, the markets will be watching closely for any further hints of future policy.

Today sees the release of trade balance figures and manufacturing PMI.

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