Why is the British pound sterling higher against the US dollar?

The pound sterling to US dollar exchange rate is now 3.9 pct higher than it was at the end of August. 1 GBP now converts into 1.6237 USD while on the 30th of August 1 USD converted into 1.5495.

So why has the British pound sterling made such a strong advance higher against the US dollar as of late?

Chris Towner, director of FX advisory services at foreign currency specialists HiFX says there are a number of reasons with the current US shutdown being just the latest in a strong of negative USD events:

"Considering that GBP/USD was trading in the 1.48s in July, we have seen this currency pair bounce back over the last few months to touch 1.6250.

"This is due to a combination of the buoyant economic data stemming from the UK and the decision by the FOMC not to taper their asset purchase programme. However, more recently we have seen the partial shutdown in the US put pressure on the US dollar as Congress fails to agree on the budget. Then, by October 17th the US Treasury will require Congress permission to increase the debt ceiling as they will run out of available funds.
"Politics at the moment is intense and the longer a stalemate continues, the more intense the situation will become. Saying that, people will get frustrated if national parks are closed or, in the case of some Government workers, they’re unable to go to work - this should act as a catalyst for a compromise. The spotlight is currently on the US!
"GBP/USD has climbed to 1.6250, levels not seen for 9 months. The longer things stand unresolved, the more pressure this will put on the US dollar."

PS: WHERE IS GBP/USD GOING NEXT? We suggest reading the comment at 11:21 released by Deutsche Bank in today's live coverage.