The pound fell as low as $1.4999 this morning as the dollar continued its rapid ascent. The dollar has gained in strength in recent weeks as the spectre of a Fed hike in interest rates loomed ever closer. On 14 December the Fed is expected to raise rates for the first time since 2006.
Meanwhile, Eurozone investors are gearing up for a boost to the currency bloc's €1.1 trillion (£780bn) asset purchase programme this Thursday, with officials sending clear messages in recent months they were considering bolstering the programme. Some analysts are also expecting a small cut in interest rates further into negative territory.
Simon Smith, chief economist at FxPro, said:
Moving into December, it’s usually the time when markets start winding down for Christmas. As it is, there are two key events that will shape the month, the first of which arrives this week in the form of the ECB meeting on Thursday. The anticipated policy divergence between the ECB and the Fed has been a key driver on EURUSD since the middle of October.
There is a huge burden of expectations on the ECB, meaning that if the ECB falls short of expectations, we’re going to be heading for a very large short squeeze on the euro.