Sterling has fallen 1% on the day against the dollar after soft UK data this morning and traders trimming short dollar positions on uncertainty ahead of a Federal Reserve policy decision at 19:15(BST). Market players expect a dovish tone from the Fed and are divided as to whether it would go as far as a fresh round of full quantitative easing.
The greenback received an extra boost this morning as European and Asian stock markets fall on the back of fears that the global recovery is slowing. Although further stimulus has to an extent been priced in by the market, if the Fed do take steps in that direction, expect to see sterling recoup some of its losses and potentially advance beyond the $1.60 level.
