Sterling was steady today, having pulled away the previous day from its highest level since last year's Brexit vote result, after the US Federal Reserve signaled it would hike interest rates again this year, lifting the dollar across the board. 

The Fed left rates unchanged last night but signalled that it still expects one more increase by the end of the year despite a recent bout of low inflation.

The Fed said it would start trimming its balance sheet from October, in a further tightening measure.  

That drove up the dollar to its highest level in more than two weeks against a basket of currencies and the pound slipped to as low as $1.3452, having reached $1.3659 earlier in the day, its highest since June 24, 2016. 

The pound had until the Fed statement been building on the gains of last week, when it jumped around 3.3% against the dollar after the Bank of England said it was likely to hike interest rates in the "coming months". 

It was trading around $1.3500 today, flat on the day, while the dollar slipped back a touch.

Analysts said that higher UK rates are supportive for a stronger pound although the risk posed by Prime Minister Theresa May's keynote speech in Florence on Friday makes them somewhat cautious in the near-term.

May is expected to flesh out her vision of Britain's future relationship with the European Union in her speech on Friday in Florence, Italy. 

European capitals expect her to signal a readiness to pay to stay in the single market - an issue over which her government is divided. 

Analysts said sterling could suffer a knock if it appeared that May was pushing for any kind of "hard Brexit" in which Britain does not have preferential access to the single market, but that monetary tightening expectations would keep the pound supported. 

A Reuters poll yesterday found almost two-thirds of economists now expect a Bank of England rate hike to come in November, though three quarters of those queried believed that tightening policy then would be a mistake.