- David Kern, chief economist at the British Chambers of Commerce
Britain's trade gap unexpectedly widened in June, fuelling concerns over the effect a strong Pound is having on competitiveness of British goods abroad. According to figures from the Office for National Statistics, the nation's trade deficit reached 9.4 billion pounds, compared to 9.2 billion pounds in May after U.K.'s exports declined more than imports, as geopolitical crisis between Russia and the west, moribund Euro zone's economy and a strong Pound are making British goods more expensive abroad and weighing on foreign demand for U.K.'s goods in the short term. Economists, however, had expected trade deficit to come in at 8.8 billion pounds. Led by drop in energy products and other manufactured goods, ONS said the value of exports fell by 400 million pounds to 23.5 billion pounds. The amount Britain imported also declined slightly in June by 100 million pounds to 32.9 billion pounds, led by fewer oil and aircraft sales.
The Sterling has strengthened over recent months as investors expect that the Bank of England will be the first of the major central banks to lift interest rates, either towards the end of this year, or in early 2015. So far this year the Pound rose to the upper bound of the 1.67 level up from a lower range of the 1.64 point in the beginning of the year, thus gaining as much as 2.2% versus the U.S. Dollar.
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