Phrase in quotation marks

I'd go for the first one. I have a feeling, though, that people's responses may well depend on which side of the Atlantic they learned grammar. I believe--correct me if I'm wrong--that Americans always put the punctuation inside the quotation marks.

Depends on the publication's house style, I think. If you're following AP style, commas and periods stay inside the quotes. All other punctuation goes outside.

Examples:

Laura held back from embracing Nell in her usually enthusiastic fashion, limiting herself to a simple "Thank you."

...but...

Laura held back from embracing Nell in her usually enthusiastic fashion--limiting herself to a simple "Thank you"--because she was embarrassed.

Cap the T.

If the speech were longer, it'd begin with a cap. "He struggled to speak and managed only a soft 'Who, who – are you there?" before closing his eyes and falling back onto the pillow."

Is this a direct quotation?

Rules for quotations...but I don't think that's your question...

Always capitalize the first word of a direct quotation-if the quotation is interrupted by other words the second part should not begin with a capital letter unless the second part is the beginning of a new sentence or a word that is capitalized anyway.

Any direct quotation should be set off from the rest of the sentence by using a comma, a question mark, or an exclamation point.

Commas and periods always go inside the closing quotation marks. (There are different rules for this when someone is quoting someone else and asks if he really said that...but that's a whole different conversation.)

Colons and semicolons always go outside the closing quoation marks.
Big question is...are you using thank you as a direct quotation...once you answer that, then the rules apply.

I know I'm going to sound really stupid (bear in mind I posted my original response before breakfast), but when I read the sentence, Laura held back from embracing Nell in her usually enthusiastic fashion, limiting herself to a simple "thank you", I read it to mean that she gave a more restrained embrace by way of a thank you.

See, I told you I'd sound stupid!

I shall now pop my dunce cap on my head and sit in the corner.

Why not just write:

She murmured "Good day" and "Pleasure meeting you" all around before slipping off after her sister.

Or simply:

She murmured pleasantries all around before slipping off after her sister.

Here’s a related question. If the words were not actually said, would you use quotes or italics? Would you capitalize or not? In my WIP, I’ve written it like so:



Tony’s face, all white and peaceful, his lips open as though saying, Go figure.

Thank you

Laura held back from embracing Nell in her usually enthusiastic fashion, limiting herself to a simple thank you.