Sterling reversed Monday's gains, falling a full cent, or 0.6%, against the greenback after a large sell off in the wake of disappointing UK GDP data.

• The low preliminary GDP figure saw investors drop the pound, even though it did reveal that Britain has now left the recession.
  
  
• The data served a blow to hopes that the economic recovery in the UK is firming. Although later revisions to the GDP may show a stronger figure, there are clearly still headwinds to be faced.
  
  
• The dollar was also supported by continued risk aversion from news that China may be tightening its economic policy.
  
  
• China has now implemented higher reserve limits for certain banks to cool off its rate of economic growth. This has raised concern that global economic growth could slow, which has caused a wave of risk aversion in the market, benefitting the US dollar.
  
  
• In trading this morning, the pair is holding steady around the closing price. Dollar maybe on the back foot later as investor await the Fed's latest interest rate decision, due at 19:15.