The British pound is higher against the US dollar on Thursday.
The theme was one of dollar weakness as markets interpreted the latest meeting of the Federal Reserve as meaning more easy money policies were on route in the US.
Having stalled for the best part of a week, upwards momentum was evident in the pound again, in large part owing to weakness in the dollar as well as the euro.
GBP/USD was up by 149 pips (+1.19%) to 1.2613 as of 3.30pm GMT.
The currency pair rose at the start of the day but waited until later in the afternoon before pushing through the big 1.25 level before quickly moving on to 1.26. Yesterday the exchange rate rose 0.35% putting weekly gains at +1.97%.
GBP: Jumps above 1.26 to 6-week high
There was no UK economic data or major UK events to disturb the pound which rose on a day sandwiched between the Federal Reserve and European Central Bank meetings.
The currency has traded sideways underneath key resistance levels like 1.25 in GBP/USD and 1.15 in GBP/EUR but was potentially signalling a shift into a more positive gear on Thursday after both the central banks of the US and Europe unveiled plans to ease policy further.
USD: Fed expand ‘Main Street’ lending program
Losses in the dollar accelerated in the afternoon when the US central bank expanded another of its numerous new lending programs. The so-called Main Street lending program will now include businesses with up to 15,000 employees and $5 billion in revenue.
Month-end fixings may have added to the volatility as traders reacted to the news from the Federal Reserve – as well as to the ECB as well as multiple corporate earnings releases. As a reminder month-end fixings are when portfolio managers adjust currency hedges based on the performance of international equity performance.
The losses in the dollar added to overnight weakness when the Federal Reserve left its unlimited bond buying in place and left the door open to new programs to support the United States economy, all of which means the printing of more dollars.
