Falls in European share prices also supported the dollar, which has a tendency to gain when investors shed risk assets. Movements in the foreign exchange market were further dulled because Tokyo markets were closed for a national holiday.
The dollar fell as stocks gained the previous day after data showed a pick-up in manufacturing activity round the globe, but later lost some ground on concerns about the banking system.
Sterling tumbled against the dollar on Tuesday when details were published of a shake-up of some government-acquired banks.
Shares in Royal Bank of Scotland (RBS.L) fell some 5 percent in early trade after it agreed to sell off some businesses. [ID:nL3540088]
In contrast, Lloyds Banking Group (LLOY.L) stocks rose some 2 percent after it said it would launch a record 13.5 billion pound ($22 billion) rights issue.
But UK and European shares were down 1.0 percent in early trade. A poor performance from UBS also weighed on shares.
At 0725 GMT, the pound was at $1.6308 GBP=D4, down 0.5 percent on the day, after falling to a one-week low of $1.6292.
A dearth of major economic data during European hours will likely leave traders taking their cue from stock markets. But they remain wary -- as well as the Fed, the European Central Bank and the Bank of England will also hold policy meetings this week. [ECB/INT] [BOE/INT]
The Fed is expected to keep its benchmark interest rate unchanged near zero, where it has been since December. The focus is on how policymakers will represent future options, but many analysts say the Fed is unlikely to change the wording of keeping rates low for an "extended period."
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