The dollar enjoyed a recovery from recent lows as the Federal Reserve pushed the interest rate up and hinted at further hikes.

This morning the dollar was at 1.8552 against sterling and at 1.2703 to the euro.

Yesterday saw the Fed decide to continue its long-term rate rising policy, as the base rate went up to five per cent.

Over two years the interest rate has now climbed from two per cent to five per cent, as the 16th quarter percentage point increase took hold.

In a statement the Fed said economic growth had been "quite strong so far this year".

"The committee sees growth as likely to moderate to a more sustainable pace, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices," the Fed added.

Meanwhile, the Treasury stepped back from accusing the Chinese of manipulating the yuan in its official report on the currency, as the dollar enjoyed a positive reaction from the Federal Reserve sentiments.