Investing.com - The pound rallied more than 1% against the weaker dollar on Thursday as initial relief over a deal to avoid a U.S. default was overtaken by concerns about the economic impact of the two-week government shutdown.
GBP/USD hit 1.6118 during European afternoon trade, the pair’s highest since October 9; the pair subsequently consolidated at 1.6116, gaining 1.06%.
Cable was likely to find support at 1.5938, the session low and resistance at 1.6176, the high of October 4.
The dollar initially gained ground against the other major currencies after the U.S. Congress passed a bill to reopen the government and raise the debt ceiling, just hours ahead of a deadline to avert a debt sovereign debt default.
The deal will fund the government until January 15 and raise the government borrowing limit until February 7. Both sides also agreed to talks over broad budget issues in an attempt to reach a longer-term deal by December 13.
Bu the dollar weakened amid fears over the impact of the government shutdown on the already fragile economic recovery, which could prompt the Federal Reserve to the delay plans for scaling back its stimulus program until at least the start of next year.
The possibility of another debt crisis also loomed, as the temporary solution does not resolve the underlying budgetary issues dividing Republicans and Democrats.
Chinese rating agency Dagong cut its sovereign rating on the U.S. to A- from A on Thursday, fuelling fears that other agencies could follow suit. Fitch placed its triple-A rating on the U.S. on “rating watch negative” earlier this week.
Sterling extended gains 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.
Elsewhere, sterling was slightly higher against the euro, with EUR/GBP dipping 0.08% to 0.8477.
The U.S. was to publish a report on initial jobless claims and the Philly Fed manufacturing index later in the trading day.
GBP/USD hit 1.6118 during European afternoon trade, the pair’s highest since October 9; the pair subsequently consolidated at 1.6116, gaining 1.06%.
Cable was likely to find support at 1.5938, the session low and resistance at 1.6176, the high of October 4.
The dollar initially gained ground against the other major currencies after the U.S. Congress passed a bill to reopen the government and raise the debt ceiling, just hours ahead of a deadline to avert a debt sovereign debt default.
The deal will fund the government until January 15 and raise the government borrowing limit until February 7. Both sides also agreed to talks over broad budget issues in an attempt to reach a longer-term deal by December 13.
Bu the dollar weakened amid fears over the impact of the government shutdown on the already fragile economic recovery, which could prompt the Federal Reserve to the delay plans for scaling back its stimulus program until at least the start of next year.
The possibility of another debt crisis also loomed, as the temporary solution does not resolve the underlying budgetary issues dividing Republicans and Democrats.
Chinese rating agency Dagong cut its sovereign rating on the U.S. to A- from A on Thursday, fuelling fears that other agencies could follow suit. Fitch placed its triple-A rating on the U.S. on “rating watch negative” earlier this week.
Sterling extended gains 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.
Elsewhere, sterling was slightly higher against the euro, with EUR/GBP dipping 0.08% to 0.8477.
The U.S. was to publish a report on initial jobless claims and the Philly Fed manufacturing index later in the trading day.