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Pound Drops as Analyst Cools Hopes of Big U.K Fiscal Stimulus

By Yasin Ebrahim

Investing.com – The pound hovered near three-month lows against the dollar Thursday, shrugging off better-than-expected U.K. retail sales data amid falling hopes the U.K. is set to unveil a big increase in fiscal spending next month.

"The U.K. government is unlikely to unveil a big increase in fiscal spending in the March 11 Budget," Bank of America said. "We don't expect a meaningful fiscal impulse near term."

GBP/USD fell 0.31% to $1.2879, shrugging off data showing a better-than-expected rise in U.K. retail sales of 0.9% last month.

Weakness in cable underpinned the dollar's advance amid signs the U.S. economy remains on solid footing.

The U.S. dollar index, which measures the green against a trade-weighted basket of six major currencies, rose by 0.16% to 99.76.

The Philadelphia Fed said Thursday its manufacturing index rose to a reading of 36.12, a three-year high, from 17 in January.

The U.S. Department of Labor, meanwhile, reported that initial jobless claims rose by 4,000 to a seasonally adjusted 210,000, in line with economists' forecasts.

USD/JPY rose 0.67% to $112.09 as traders questioned whether the yen is at risk of losing its safe-haven status against the greenback as Japan's economy is more likely to be hurt by the impact of the coronavirus given its proximity to China, ground zero of the virus.

The greenback is a "more practical safe haven" than the Japanese yen for investors seeking protection from coronavirus risks, said Rabobank FX strategist Jane Foley.

EUR/USD fell 0.12% to $1.0791.

USD/CAD gained 0.30% to C$1.3258, as loonie fell further on easing oil prices despite data showing a smaller-than-expected rise in weekly U.S. crude supplies.

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