The pound fell slightly today after a significant decline the day before, as investors waited for tomorrow's crucial US employment data.

The pound fell 0.2% to $1.1296 against the US dollar, after falling 1.4% yesterday. The euro ended up 0.25% higher against the pound at 87.55 pence.

This week, the volatility of the US dollar has led to turbulent global currency markets.

Traders are particularly struggling to address whether the Federal Reserve will maintain its aggressive rate hikes while attempting to curb inflation - which has led to a surge in the US dollar this year - or whether concerns about slowing economic growth mean it will "shift" and raise interest rates more slowly.

The US dollar experienced its largest daily decline in more than two years on Tuesday, after some weak economic data sparked hopes that the Federal Reserve may slow interest rate hikes, but rebounded a day later.

This rebound continues today, with the US dollar index rising 0.28% to 111.23, not far from last week's 20-year high of 114.78.

Investors mistakenly believe that the Federal Reserve will ease interest rate hikes, "said Michael Brown, a currency strategist at Caxton. Brown said he expects the pound to face more trouble.

Overall, the market has set its recent high near $1.15, and I believe the pound may struggle to break through that level in the near future, "he said.

On September 26th, the British currency fell to a historic low of $1.0327, and bonds plummeted after the new Treasury Secretary, Kwasi Kwarteng, announced a highly controversial tax reduction plan (especially for the wealthy) and significantly increased borrowing.

However, after market turmoil forced the Bank of England to start buying bonds again and Kwarteng U - initiated some of his tax plans, the currency rebounded.

Rating agency Fitch followed Standard&Poor's this week to downgrade the outlook for UK government debt from 'stable' to 'negative'.

A Reuters survey of nearly 60 analysts found that investors expect the pound to fall to $1.09 within a month and $1.16 within a year.

Analysts are divided on whether the pound will be parity with the US dollar before the end of the year, with 18 respondents indicating a low probability, but 17 respondents indicating a high probability.