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The dollar fell on Wednesday ahead of an expected US interest rate decision by the Federal Reserve later in the day, while the pound sterling fell on growing bets that the Bank of England will halt its historic series of rate hikes.
The dollar index, which measures the performance of the US currency against a basket of competing currencies, fell 0.1 percent to 105 points.
The pound sterling was volatile, and in the latest trading fell 0.23 percent to $1.2364 after touching its lowest levels in about four months after data showed inflation in the United Kingdom slowing more than expected in August.
Official data showed on Wednesday that annual consumer price inflation in Britain unexpectedly fell to 6.7 percent in August, a day before the Bank of England decided on interest rates.
Economists polled by Reuters had expected the consumer price index to rise to 7.0 percent from 6.8 percent in July.
Goldman Sachs said on Wednesday it now expects the Bank of England to keep interest rates unchanged on Thursday after data showed British inflation was much lower than expected in August.
Markets expect nearly 60 percent that the Bank of England will keep interest rates unchanged on Thursday after 14 consecutive increases extending into December 2021.
On the other hand, markets largely expect the Federal Reserve to keep interest rates between 5.25 percent and 5.50 percent, putting the focus on the central bank’s future guidance.
The yen settled in the latest trading at 147.87 per dollar after touching the lowest level in 10 months against the US currency at 148.17 before the Federal Reserve’s decision.
The yuan was largely unchanged in external trading and recorded 7.3055 after China confirmed market expectations by keeping key lending rates unchanged on Wednesday.
The euro rose 0.24 percent to $1.0705.
