British television news crews will have trouble finding happy UK shoppers returning home with Italian suits or gadgets from Japan. This is because US dollar weakness, not sterling strength, is the real story in currency markets. Against the euro, sterling has been flat over the past fortnight and is only up 2.4 per cent this year. It has also barely moved versus the yen, although the Japanese currency has suffered this year as a weaker than forecast recovery in consumption has pared back expectations of rate rises.

Foreign exchange strategists have been predicting a sustained fall in the dollar for some time, and its obstinacy has caused widespread bewilderment. The fundamental arguments for dollar weakness – an unsustainably high US current account deficit and a medium-term shift in central bank reserves away from the greenback – are well worn. Why then, did the dollar finally crack two weeks ago?