The pound has lost its shine today, falling below crucial levels against both the euro and the dollar.
By early afternoon sterling was trading down 0.6 per cent against the greenback at $1.2959 as speculation ahead of the US Federal Reserve's meeting grips the currency markets.
Against the euro, the pound dipped 0.5 per cent to hover below the €1.16 mark.
Although markets do not expect Janet Yellen to pull the trigger on the second interest rate rise since the financial crisis, they have not ruled it out. Futures prices indicate a 20 per cent chance of a rise, while both Barclays and BNP Paribas are betting on a rate hike.
Ongoing speculation over the shape of the UK's future relationship with the EU was also cited by analysts as a reason for the pound's weakness. Figures released this morning revealed 13,000 firms rely on the EU's financial services passport to operate in the UK from an EU base and vice versa, while Theresa May is on Wall Street to meet New York investment banks to talk all things Brexit.
Despite the recent pressure, Oxford Economics said they saw the potential for sterling to "surprise" the markets and rally over the longer-term. "A rise to the mid- to -high- $1.30s over the next year isn't beyond the bounds of possibility," said their lead UK economist, Martin Beck.