Svalgaard, and independently Mansurov, discovered a correspondence between the geomagnetic variations at the geomagnetic poles and the sector polarity of the interplanetary magnetic field (IMF). Heppner noted an asymmetry in the magnetospheric electric convection field observed within the polar caps at ionospheric altitudes which is also related to the sector polarity of the IMF. It is shown that both effects can be consistently explained by differential rotation of the magnetospheric plasma with respect to the earth. If the azimuthal component of the IMF is directed toward dusk, the magnetospheric plasma is slowed down in the northern polar cap and is accelerated in the southern polar cap. If the azimuthal component of the IMF is directed toward dawn, the situation is reversed. This deviation from corotation of the magnetospheric plasma disappears at lower latitudes. It is suggested that this differential rotation is generated by a vertical component of the interplanetary electric field which penetrates into the day side regions of the magnetosphere. A quantitative model of the electric field and current configuration within the magnetosphere and the ionosphere representing these effects is given.