The U.S. dollar hit its highest level in two months against the sterling on Wednesday on concerns over next year's Brexit negotiations, while expectations of higher U.S. economic growth also underpinned the greenback.
Sterling fell as much as 0.5 percent to a session low of $1.2201, its weakest since Oct. 31. Britain faces uncertainty next year over Brexit negotiations. In October, Prime Minister Theresa May said she would trigger the process to leave the EU by the end of March.
Expectations that U.S. President-elect Donald Trump's incoming administration would boost U.S. growth through fiscal stimulus also continued to bolster the dollar.
The dollar index, which measures the greenback against a basket of six major rivals, has gained 4.9 percent this year. All those gains have come after the Nov. 8 U.S. election.