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Forex traders have witnessed sterling drop nearly half a per cent at $1.5835 after traders "covered short positions", Reuters reports, while yesterday morning saw the pound down by 0.9 per cent.
This comes the day before the public spending cuts are to be announced, alongside Bank of England (BoE) minutes showing how it voted at its last policy meeting.
According to the news provider, those trading on the markets expect the BoE to have a three-way split.
Christian Lawrence, currency strategist at RBC Capital Markets, said there is a downside risk for the pound, adding: "The market will look to whether the budget cuts are credible."
Meanwhile, the US currency was boosted after the its treasury secretary Timothy Geithner pointed out that the country needed to protect confidence in a strong dollar.
Posted by Greg Secker
