-Stephen Saywell, global head of FX strategy at BNP Paribas
Britain's trade deficit shrank in January to its lowest level since mid-2013, due to a surge of exports of services as well as decline in oil prices. According to the Office for National Statistics, the total deficit shrank to 616 million pounds from 2.14 billion pounds in December. This was caused by the highest surplus in services since records began 17 years ago. Britain's trade in services recorded its monthly surplus of 7.80 billion pounds in January with exports rising to a record high of just over 18 billion pounds. The UK is traditionally a net exporter of services, partly due to the international influence of the City of London and its financial industry. The gap in trade was also appeared to be smaller due to a decline in the value of imported goods Britain, which recorded the lowest level in more than four years, in large part due to cheaper imports of oil. Imports of crude were 2.2 billion pounds in January, their lowest level since May 2009. The deficit in goods trade also narrowed to 8.41 billion pounds, the smallest value since March of last year.
A separate report by the Royal Institution of Chartered Surveyors, showed British house prices grew more than expected in February, adding to signs an increasing shortage of properties may mark the end of a slowdown in the housing market. RICS monthly house price balance came in at +14 in the reported month, doubling from +7 in January.
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