The Fed lowered its window for the benchmark policy rate by 50 basis points to 4.75%-5%, where traders had been leaning before the decision. The dollar first fell broadly, hitting a two-and-a-half-year low on sterling, but then recoiled sharply.

Investor expectations had largely shifted towards a dovish outcome in the days leading up to the Fed's move on Wednesday, with money markets pricing in around a 65% chance of a 50 basis point (bp) cut.

The Federal Reserve's 50 bp rate cut has made for a volatile 15 hours or so in the foreign exchange market. Click to read.