Which country is home to the world's northernmost capital city of a sovereign state?

Iceland

Iceland's capital, Reykjavik, is located at approximately 64° North, making it the northernmost capital of a sovereign nation. Despite its high latitude, the city stays relatively temperate thanks to the warming effects of the North Atlantic Current. A memorable way to remember this is that Reykjavik's name translates to 'Smoky Bay,' named for the steam rising from its abundant geothermal springs.