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White House drama helps pound hold $1.32

Sterling is holding some notable levels, helped by worries about what turmoil in the White House might mean for the dollar, and ahead of a finely-balanced rate call later this week from the Bank of England.

The pound is at $1.3207, a level it last touched in mid-September, holding the ground it gained during Monday’s 0.6 per cent advance against the greenback. Over the last five sessions it is up 1.8 per cent, taking its recovery for 2017 to over 7 per cent.

There is a growing sense of unease at the potential market implications of the dramatic scenes at the White House, where Anthony Scaramucci was sacked as director of communications after just 10 days in the job.

Michael Every, a senior strategist at Rabobank, says:

The biggest question now must surely be if this latest White House firing is indicative of an administration in total meltdown, in which case the dollar seems unlikely to avoid being swept along with it.

The dollar index is flat on the day at 92.954, but fell 2.7 per cent over July in its fifth straight month of declines – an unusually long spell in the dumps.

The pound is also 0.2 per cent stronger on the session against the euro at £0.8945.

The moves come ahead of Thursday’s rate call at the Bank of England, where the monetary policy committee is delicately poised after it voted 5-3 to hold rates at the its last meeting. The BoE’s quarterly inflation report is also due to be released at the same time, when policymakers will add some depth to the market’s thinking on the longer-term policy outlook.