The dollar hit a roughly seven-week low against a basket of major currencies on Wednesday on worries that U.S. President Donald Trump was focusing too much on protectionism and not enough on pro-growth policies.
Sterling jumped above $1.26 for the first time in six weeks on hopes for a trade deal between Britain and the United States, which Prime Minister Theresa May said on Wednesday would "put UK interests and UK values first."
Moves by Trump on oil pipeline projects on Tuesday had boosted U.S. equity markets and propped up the greenback. The dollar was generally weaker on Wednesday despite U.S. shares gaining and the Dow Jones Industrial Average trading above 20,000 for the first time.
But the focus on Wednesday shifted away from policies that might boost growth. Trump was expected later in the day to start signing executive orders aimed at securing the U.S. border, including a temporary ban on most refugees.
"Rather than hearing about fiscal stimulus, which I think most people assume is the gateway to higher interest rates and a stronger dollar, out of the gate from Trump we've heard about building a wall and trade protectionism," said David Gilmore, partner at FX Analytics in Essex, Connecticut.
Trump also said on Wednesday he would seek a "major investigation" on voter fraud in the November election.
The dollar index, which measures the greenback against a basket of six other major currencies, was last down 0.18 percent at 100.17 after touching 99.835. That marked its lowest level since Dec. 8 and a nearly 4 percent decline from a 14-year high of 103.820 touched at the start of the year.
Sterling was last up 0.6 percent against the dollar at $1.2603 after hitting a six-week high of $1.2607. The euro was down against the dollar at $1.0723.
The dollar was flat against the at 113.78 yen. The Australian dollar bucked the trend and fell against the greenback to a six-day low of $0.7515 after both quarterly and annual inflation undershot expectations, rekindling hopes of one more interest rate cut from the Reserve Bank of Australia (RBA).
"The risk is that the RBA will have to do more with policy to generate inflation," said Hamish Pepper, a currency strategist at Barclays in London.