Sterling rose to a near 11-year high against the dollar today, spelling good news for those travelling to the United States, but bad news for transatlantic exporters.
The greenback also sank to another new low against the euro and a three-year low against the Japanese yen.
The dollar was trading at $1.2239 against the euro in London trading at 2.40 p.m. a slight recovery from an earlier low of $1.2260 but below last night's close of $1.2221.
Against the Yen the dollar was at $107.295, a three-year low.
Sterling climbed to $1.7408 by mid-morning, the highest level since September 1992, analysts said.
The dollar's weakness against Sterling could give a much-needed boost to UK airlines and tour operators who saw travel to the US fall following the September 11th terrorist attacks in 2001 and other world events.
But it is likely to be an unwelcome development for companies that do much of their business in the US, as their products become more expensive for US buyers.
The latest rise was widely seen as a reaction to speculation that the American equivalent to the UK's Bank of England, the Federal Reserve, will keep interest rates on hold when it announces its latest decision this evening.
The Fed cut rates to 1 per cent in June and has said it could keep them low for a
while. Higher interest rates generally help currencies by offering investors better returns on deposits.