Dollar holds fast
The dollar remained firm on Wednesday ahead of a much-anticipated rate decision by the Federal Reserve later in the day, while sterling slid on increased bets the Bank of England (BoE) will pause its historic run of interest rate hikes.
The US dollar index, which measures the currency against a basket of rivals, stood firm at 105.10 with traders awaiting the Fed's rate decision.
The pound was volatile, last down 0.26 percent to $1.2360 after touching its lowest in almost four months following data showing UK inflation slowed more than expected in August.
British annual consumer price inflation (CPI) unexpectedly fell to 6.7 percent in August, official data showed on Wednesday, a day before the BoE is expected to raise rates again.
Economists polled by Reuters had forecast CPI would rise to 7.0 percent from July's 6.8 percent.
"A shock deceleration in UK inflation provides good news for the BoE heading into tomorrow's rate decision," said Nick Rees, FX Market Analyst at Monex Europe.
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