The GBP/USD exchange rate has dipped -0.2 per cent to US$1.354 after Mr Williams suggested that the Federal Reserve should hike interest rates three times in 2018, while claiming that President Donald Trump’s tax reform plans would give the economy a boost.

The virtually empty UK data calendar today means that Sterling will be left without much support against the US dollar’s advance, unless there are positive developments on the UK’s political front, particularly regarding Brexit.

Theresa May is today expected to carry out a Cabinet reshuffle; her biggest shakeup since the disastrous snap election last year which left her too weak politically to change the key players in government.

Although intended to be a show of authority, it is believed that ministers such as Foreign Secretary Boris Johnson, Chancellor of the Exchequer Philip Hammond and Brexit Secretary David Davis are all unlikely to lose their jobs.

Mr Johnson has apparently made it clear that he would not accept being demoted or moved to another role and the Prime Minister is unlikely to want to cause friction with a potential leadership challenger.

Of particular interest to markets will be how the balance of pro-Brexit and anti-Brexit ministers is maintained or altered by the reshuffle, as this could have a significant impact upon the government’s negotiating strategy going forwards.

The US dollar has been able to advance after Mr Williams said yesterday that the US economy was likely to run around full capacity over the coming years and that employment would fall from the current 4.1 per cent to 3.7 per cent during 2018.

Mr Williams said: “We're in a pretty good situation: the economy is doing great, everyone expects us to raise rates gradually ... and if the data change we can respond to that.”

“Something like three rate hikes makes sense to me.”

Consensus amongst economists is that the Federal Reserve will hike interest rates three more times this year, with the Fed Funds futures market placing odds of 61.6 per cent on borrowing costs being raised to 1.75 per cent during the second monetary policy meeting of the year, which takes place on March 21.

There is no relevant US economic data due before the end of today’s London session, although there will be more from the Federal Reserve during the North American session

Federal Reserve official Rafael Bostic will speak in Atlanta on the topic of the economic outlook this evening.

Meanwhile, Mr Williams is due to speak again this evening at the Inflation Targeting Conference in Washington, along with fellow Federal Reserve official Eric Rosengren.

Given the subject matter, it seems likely that the policymakers will provide more clues on the outlook for 2018, which could provide additional support for the US dollar.