U.K. trade gap widened in January

Note: This section contains information in English only.
Source: Dukascopy Bank SA
"Unless our economic recovery broadens out, and companies feel confident enough to implement their growth plans both at home and overseas, it will be merely good rather than truly great"
- John Longworth, Director General of the British Chambers of Commerce


After touching a high at 1.6717 on Thursday, the cable turned lower, penetrating an important psychological support level at 1.66, as U.K. trade gap surprised markets to the downside.

A report from the ONS showed the nation's trade deficit soared to 9.793 billion pounds in the first month of 2014, advancing from 7.662 billion pounds a month earlier and missing market's expectations of a 8.6 billion pounds shortfall. The main downside pressure came from a 4% drop in exports that reached 23.248 billion– the lowest level since June 2012. Shipments to the European countries plunged 3.7%, while exports to non-EU nations declined 4.3% between December and January. The total volume of exports fell 3.8%, while imports surged 5.8%. The nation's trade balance shows the extent of import and export activity over the observed period and is considered as a key contributor to the overall economic growth. During the global financial crisis, the performance of Britain's exports was disappointing even despite a fall in Sterling. Nowadays, the Pound rocketed more than 10% in trade-weighted terms since March 2013, posing additional problem for policymakers, who seeks for an opportunity to start raising borrowing costs, as economic growth accelerates. Moreover, economists claim that any further appreciation of the Sterling will not be helpful in terms of facilitating the process of rebalancing economic recovery towards net exports.
© Dukascopy Bank SA

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