Sterling fell against a broadly firmer dollar on Wednesday, tracking losses in the euro versus the US currency as China's rate hike and eurozone peripheral debt worries led investors to dump risky currencies and seek safety in the greenback. Also dogging the pound was recent speculation that the Bank of England may opt to restart its asset purchase programme, which continued to keep the UK currency under selling pressure ahead of a UK rate setting meeting on Thursday.
In late London trade, sterling fell more than half a percent on the day to the day's low of $1.5947. Losses accelerated as the euro fell roughly 1 percent against the dollar, before trimming some losses. Even as the pound pared losses, it was poised to end the day below $1.6045. That level, which is the pound's 200-day moving average, was seen as key daily technical support level which has held during the past week or so despite intraday breaks lower. A daily close below would pave the way to $1.5912, a five-month low hit last week. A sluggish euro fell 0.4 percent on the day to a low of 89.42 pence.