Investing.com - The pound firmed against the dollar on Thursday amid expectations for the Federal Reserve to keep its ultra-loose monetary policies in place to offset any damage a recent U.S. government shutdown and default fears may have inflicted on recovery.
Better-than-expected U.K. retail sales pushed the pound up as well.
In U.S. trading on Thursday, GBP/USD was trading at 1.6160, up 1.33%, up from a session low of 1.5941 and off from a high of 1.6172.
Cable was likely to find support at 1.5894, Wednesday's low, and resistance at 1.6260, the high from Oct. 1.
The U.S. Congress passed a bill to reopen the government and raise the debt ceiling on Wednesday, just hours ahead of a deadline that would have opened the doors to possible sovereign debt defaults.
The deal will fund the government until Jan. 15 and raise the government borrowing limit until Feb. 7.
Both Republicans and Democrats also agreed to talks over broad budget issues in an attempt to reach a longer-term deal by Dec. 13.
Still, the dollar weakened amid concerns that the 16-day shutdown and accompanying default fears took their toll on an already fragile economic recovery, which could prompt the Federal Reserve to delay plans for wind down its stimulus program until early 2014.
Prior to the shutdown, many were expecting the Fed to move in December.
The Fed is currently buying USD85 billion in Treasury holdings and mortgage debt a month to boost the economy, a monetary policy tool known as quantitative easing that drives down interest rates to spur recovery, weakening the dollar in the process.
On Wednesday, the Federal Reserve released its Beige Book, which analyzes current economic conditions, and the document revealed that the U.S. central bank was concerned about the effects fiscal drags may have on recovery.
"Contacts across Districts generally remained cautiously optimistic in their outlook for future economic activity, although many also noted an increase in uncertainty due largely to the federal government shutdown and debt ceiling debate," the Beige Book read.
Elsewhere, the U.S. Department of Labor said Thursday the number of individuals filing for initial jobless benefits last week declined by 15,000 to a seasonally adjusted 358,000 from a downwardly revised 373,000 in the preceding week.
Analysts had expected U.S. jobless claims to decline to 335,000 last week.
Separately, data revealed that the Philly Fed manufacturing index ticked down to 19.8 from 22.3 in September, but came in above expectations for a reading of 15.0.
Across the Atlantic, the pound saw support after data released on Thursday showed that U.K. retail sales rose at a faster than expected rate in September.
The Office for National Statistics said U.K. retail sales rose 0.6% in September from a month earlier, compared to expectations for a 0.4% increase and were 2.2% higher on a year-over-year basis.
The pound, meanwhile, was up against the euro and up against the yen, with EUR/GBP down 0.28% at 0.8460 and GBP/JPY up 0.42% at 158.15.
Better-than-expected U.K. retail sales pushed the pound up as well.
In U.S. trading on Thursday, GBP/USD was trading at 1.6160, up 1.33%, up from a session low of 1.5941 and off from a high of 1.6172.
Cable was likely to find support at 1.5894, Wednesday's low, and resistance at 1.6260, the high from Oct. 1.
The U.S. Congress passed a bill to reopen the government and raise the debt ceiling on Wednesday, just hours ahead of a deadline that would have opened the doors to possible sovereign debt defaults.
The deal will fund the government until Jan. 15 and raise the government borrowing limit until Feb. 7.
Both Republicans and Democrats also agreed to talks over broad budget issues in an attempt to reach a longer-term deal by Dec. 13.
Still, the dollar weakened amid concerns that the 16-day shutdown and accompanying default fears took their toll on an already fragile economic recovery, which could prompt the Federal Reserve to delay plans for wind down its stimulus program until early 2014.
Prior to the shutdown, many were expecting the Fed to move in December.
The Fed is currently buying USD85 billion in Treasury holdings and mortgage debt a month to boost the economy, a monetary policy tool known as quantitative easing that drives down interest rates to spur recovery, weakening the dollar in the process.
On Wednesday, the Federal Reserve released its Beige Book, which analyzes current economic conditions, and the document revealed that the U.S. central bank was concerned about the effects fiscal drags may have on recovery.
"Contacts across Districts generally remained cautiously optimistic in their outlook for future economic activity, although many also noted an increase in uncertainty due largely to the federal government shutdown and debt ceiling debate," the Beige Book read.
Elsewhere, the U.S. Department of Labor said Thursday the number of individuals filing for initial jobless benefits last week declined by 15,000 to a seasonally adjusted 358,000 from a downwardly revised 373,000 in the preceding week.
Analysts had expected U.S. jobless claims to decline to 335,000 last week.
Separately, data revealed that the Philly Fed manufacturing index ticked down to 19.8 from 22.3 in September, but came in above expectations for a reading of 15.0.
Across the Atlantic, the pound saw support after data released on Thursday showed that U.K. retail sales rose at a faster than expected rate in September.
The Office for National Statistics said U.K. retail sales rose 0.6% in September from a month earlier, compared to expectations for a 0.4% increase and were 2.2% higher on a year-over-year basis.
The pound, meanwhile, was up against the euro and up against the yen, with EUR/GBP down 0.28% at 0.8460 and GBP/JPY up 0.42% at 158.15.