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Markets continue to fret that a further slowdown in the UK economy could force the Bank of England to slash interest rates as early as November.

Yellen claimed that the Fed has no set timetable to raise interest rates, although suggested the economy is ready for a hike before the end of the year.

The Euro fell on Tuesday, dipping back below 1.12 vs the US Dollar, as concerns regarding the fragile European banking system came into sharp focus.

Polls following the debate were mixed, however, it was Clinton that appeared to emerge as the victor, winning 62% of votes in a snap poll by CNN.

The market reaction to the first debate between Clinton and Trump will be key to understand currency market drivers leading up to the Presidential Election.

Sterling rallied for the second day on Thursday as MPC member Kristin Forbes appeared unconvinced about the need for an additional interest rate cut.

The Fed remains firmly on course to hike interest rates at some point in 2016, which should recommence the US Dollar’s appreciation.

The Fed’s Federal Open Market Committee will announce its interest rate decision at 19:00 UK time, with Chair Yellen’s press conference 30 minutes later.

Investors have begun gearing up for crucial monetary policy announcements from the Federal Reserve and the Bank of Japan later this week.

The positive inflation news may not tip the balance towards a hike at this week's FOMC meeting, but we do expect a hawkish statement that prepares markets for a hike before year end.