The dollar rose yesterday as Federal Reserve officials highlighted the threat of inflation, while in the UK sterling rose on the back of good manufacturing data.
This morning, sterling stood at £1.88695, 1.48190 and 222.490 yen.
Good data from a British manufacturing survey helped to raise the pound as the prospect of a November interest rate rise became more certain.
Today, data on the services sector, a house price survey from Halifax and a Nationwide customer confidence survey are set to guide the pound's fate.
The Nationwide figures for consumer confidence are expected to be up from August's record low while UK PMI Services data is expected to soften.
In the US, data for non-manufacturing performance is expected to fall today as consumer spending is held back by the chilly housing market.
However, the prospect of increases in US interest rates became more likely as Thomas Hoenig, a non-voting member of the Federal Reserve's rate-setting committee, spoke out to say inflation is still a concern for the US economy.
He said in a speech that inflation was "too high".
In Japan, the yen also came under some pressure as North Korea announced it planned to test a nuclear bomb.
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Recent projections have pegged the UK economic recovery to gain further momentum over the next two...
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