  We report new experiments that test quantum dynamical predictions of
polarization squeezing for ultrashort photonic pulses in a birefringent fibre,
including all relevant dissipative effects. This exponentially complex
many-body problem is solved by means of a stochastic phase-space method. The
squeezing is calculated and compared to experimental data, resulting in
excellent quantitative agreement. From the simulations, we identify the
physical limits to quantum noise reduction in optical fibres. The research
represents a significant experimental test of first-principles time-domain
quantum dynamics in a one-dimensional interacting Bose gas coupled to
dissipative reservoirs.
