Pound Sterling to US Dollar (GBP/USD) Exchange Rate – US Dollar forecast for best January since 2009

Friday saw the release of data which showed that consumer spending in the world’s largest economy increased more than expected in December sending the already well supported currency higher against most of its peers.

According to the US Commerce Department, household purchases (which account for 70% of the entire US economy) climbed by 0.4% in December, beating economist expectations for a rise of 0.2%. Despite the rise a separate report showed that wage growth in the US remained flat and sent the saving rate to its lowest level in almost a year.

The US Dollar advanced higher after the data was released and remains supported by a recent run of positive data releases. Yesterday’s report showed that household spending in the final quarter of 2013 climbed at its fastest pace in three years.

A separate report showed that US’s Chicago PMI fell less-than-expected last month. According to research group Kingsbury International said that the Chicago PMI fell less than economists had forecast. It dropped from 60.8 to 59.6.

The US Dollar is now set to make it strongest January performance since 2009 as it continues to climb against its peers. The recent demand for safe haven currencies in the wake of the ongoing selloff in emerging markets has also benefitted the currency and the Federal Reserves decision to taper its easing programme has also provided strength to the ‘Greenback’.

Looking ahead to the start of next week the Dollar looks likely to continue to remain supported due to the release of manufacturing PMI reports which are forecast to show that output in the sector increased in January.