News that the Federal Reserve had raised interest rates failed to mitigate the impact on the dollar of Hurricane Rita overnight, as the storm gathered momentum amid nervous trading.

Falling against the euro, the dollar stood at 1.2202 to the single currency this morning, as developments pushed it to a ten-week low.

Warnings from meteorologists that Hurricane Rita was approaching a Category 4 level - equivalent to the force of Hurricane Katrina which devastated the Gulf Coast and inhibited oil production in the area - sparked concerns among investors.

Meanwhile, publication of the Monetary Policy Committee meeting minutes in the UK helped shore up the pound against the dollar, with the decision to put interest rates on hold being approved by all members.

The dollar was 1.8072 to the pound, with the trajectory and force of Hurricane Rita set to dictate the currency's movement later in the week.

The euro, meanwhile, was still struggling in the wake of a chaotic German election result, with both parties claiming the right to form a government as coalition talks continued.

Looking forward, HBOS analyst Steve Pearson told Reuters: "Weather conditions off the southern tip of Florida and into the Gulf of Mexico have wrestled centre stage from the inconclusive German election and will now dominate market sentiment."