The pound is managing to hold on to its summertime gains on both the euro and US dollar. However, just when markets might have hoped for a quieter end to August, Donald Trump has provided another reason to keep an eye on North America. Trade talks between the US and Canada collapsed over the weekend, allowing new American tariffs on billions of dollars of Canadian goods to take effect. Ottawa has promised to respond in kind next month.

The dispute matters well beyond the Canadian dollar. Canada and the US have one of the world’s largest trading relationships, with supply chains crossing the border several times before a finished product reaches the customer. Fresh tariffs raise the prospect of higher costs for American firms and consumers, and this could have an impact on US interest rates, and our own.

That brings us neatly to the other big story of the week. Fed chair Kevin Warsh will make his first Jackson Hole keynote on Friday. Investors want some clarity after a difficult spell for US government borrowing and growing questions over how the Fed intends to communicate its next steps. The gathering itself begins on Thursday, with Warsh speaking the following day.

Currency markets were relatively restrained before the weekend. Sterling finished Friday slightly stronger against both the euro and US dollar, while the euro also made modest progress against the dollar. The question now is whether another trade dispute adds to the pressure on the greenback or instead sends investors towards the traditional safety of the world’s reserve currency.

There is not much UK data arriving today to settle that argument. Instead, attention will remain fixed on the fallout from the US-Canada row and the build-up to Jackson Hole. Later in the week, American inflation figures and European confidence data should add some harder economics to a week that has begun with politics firmly in charge.