The Pound Sterling to US Dollar (GBP/USD) exchange rate firmed on Tuesday due to the release of positive UK data and a lack of market moving economic data from the USA.
The GBP/USD exchange rate hit a session high of 1.525
The Pound Sterling firmed against many of its most traded peers as data released overnight showed that retail spending increased last month as shoppers spent more cash than usual due to sales and falling oil prices.
‘Retail sales have continued to grow with January reporting a respectable 1.6% increase. Shoppers were in the mood to buy products aimed at helping them lead a healthier lifestyle- from fruit and veg to exercise equipment, all these kinds of products have selling strongly. Given the time of year this is no surprise and retailers have capitalised by making sure they have the right stock, at the right price to help consumers achieve their New Year goals,’ said Helen Dickinson, the director general of the British Retail Consortium who compiled the data.
Separately, the National Institute of Economic and Social Research (NIESR) said that the UK economy is on course to post its strongest growth rate in nearly a decade in 2015 as tumbling oil prices encouraged consumers to spend.
The group expects that economic growth across the UK will rise to 2.9%, the fastest pace since 2006, and up from the 2.6% seen last year. The group highlighted that the economy’s growth rate was down to consumer spending.
‘Our forecast for the next two years is still really a story of domestic demand growth, but beyond this, it is the performance of productivity that is key to real wage growth and it remains the most significant domestic risk to the UK’s economic outlook,’ said Simon Kirby, an economist at NIESR.
Also supporting the Pound was data released by the Office for National Statistics, which showed that manufacturing production rose by 0.1% in December; the figure beat forecasts for a fall of -0.1%.
Pound Sterling to US Dollar (GBP/USD) Exchange Rate Forecast
The Pound is likely to hold onto gains against the US Dollar as the session progresses due to a lack of market moving economic data out of the world’s largest economy.
Sterling could soften however if concerns over the Eurozone and in particular the Greek crisis escalate and cause investors to seek shelter in the safe haven US Dollar.
