The dollar has gained ahead of this week's major announcement from the Federal Reserve over the likely trajectory of the interest rate.

This morning the dollar stood at 1.8542 to the pound and at 1.2686 against the euro.

If the Fed goes ahead with an interest rate rise this week it will mark the 16th consecutive time, with analysts speculating over the possible outcome.

Dresdner Kleinwort Wasserstein's Niels From told Bloomberg there was uncertainty over the next move from the US.

"The market is now awaiting the Fed meeting tomorrow, as it's still a bit uncertain about whether there will be a pause," he said.

The interest rate is currently set at 4.75 per cent, with incoming Fed chairman Ben Bernanke so far continuing the policy of his predecessor Alan Greenspan in pushing the base rate up.

All eyes will now be on the new chairman, with the meeting potentially signalling the first major deviation from the existing path.