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Currencies Update: Pound Sterling (GBP) Fluctuates as UK Trade Deficit Widens £2bn in June

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GBP: UK Trade Deficit Widens by £2bn in June – Pound Wavers against Majors

The Pound fluctuated against some of the majors this morning after it was revealed that the UK’s trade deficit widened by £2bn in June, hitting -£4564, up from -£2516 in May. This was the widest deficit the UK has recorded in some nine months.

The Office for National Statistics reported on the increase, stating:

‘This was mainly due to an increase in imports of both goods and services of £1.7bn. Of this, imports of goods contributed £0.6bn, with imports of machinery and transport equipment (specifically mechanical machinery, aircraft and road vehicles) from EU countries up £0.5bn’.

Indeed, imports rose 3.3% over the month, hitting a fresh all time high of £53.95bn due to a jump in the purchase of goods and services.

Industrial production for June, on the other hand, showcased a rise for the first time in months, climbing 0.3% over the same month in the previous year, whilst construction output also increased to 0.9%, up from the previous 0.5% but still below forecasts of 1.8%.

Markets continue to trade Sterling in a jittery fashion as they digest the mixed news.

GBP EUR: Pound Euro Fluctuates on Mixed Data

The Pound to Euro exchange rate has fluctuated today due to the aforementioned mixed UK data releases.

The latest geopolitical tensions regarding North Korea, China, Russia, and the US have also driven some demand back to Sterling, particularly as market concern prompts many to ‘hunker down’ and buy into perceivably safe currencies like the US Dollar (USD) the Japanese Yen (JPY) and indeed Pound Sterling (GBP).

There are no significant Eurozone data releases today, however, before the trading week ends the final German inflation figures will be released on Friday. These are currently predicted to remain at initial estimates of 1.7%. A deviation up or down will be liable to affect the GBP EUR exchange rate, especially if the geo-political sabre-rattling desists and markets become less risk averse.

GBP USD: Pound US Dollar Slips – US Dollar Deemed Safer Currency

The Pound to US Dollar exchange rate has dropped lately due to demand for the ‘Greenback’ surging amid geopolitical concerns.

Markets are currently carefully watching exchanges between the US and North Korea as Kim Jong Un continues to issue threats, this time to US territory Guam, and progresses the North Korean missile program.

US President Donald Trump asserted yesterday that further threats to the United States would be met with ‘…fire and fury like the world has never seen’ a statement that caused many investors to seek ‘.

Indeed, whilst the Pound is also considered a safer currency than many, the US Dollar is considered the world’s principal reserve currency, so it is not unusual for it to appreciate in times of perceived risk.

Geopolitical tensions are likely to continue to be the dominant influence on GBP USD movements for the time being, however, tonight will see the release of the US monthly budget statement for July and the US initial jobless claims figures.

GBP CAD: Pound Canadian Dollar Steady as UK Trade Deficit Widens, but Risk Aversion Creates Demand

The Pound to Canadian Dollar exchange rate has remained predominantly steady this morning as investors react to heightening tensions between the US and North Korea.

Risk aversion has left GBP CAD on steady ground despite the announcement that the UK’s trade deficit widened by £2bn this morning.  

Big data for Canada today will come in the form of the Canadian house price index, though with geopolitical risk dominating headlines, investors will likely be uninterested.

GBP AUD: Pound Australian Dollar Fluctuates as Risk-Sensitive ’Aussie’ Struggles

The risk-sensitive Australian Dollar dropped dramatically due to the latest North Korea crisis. GBP/AUD gave back some of its gains this morning however as markets reacted to news that the UK’s trade deficit jumped by £2bn in June.

GBP NZD: Pound Rallies against New Zealand Dollar as Interest Rates left on Hold at 1.75%

The Pound has climbed against the New Zealand Dollar this morning after last night’s announcement from the Reserve Bank of New Zealand (RBNZ) that interest rates would be left on hold at 1.75%.

Whilst, initially, investors moved to buy the New Zealand Dollar as remarks suggested that inflation remains within the RBNZ’s target threshold, this soon shifted as investors switched to reserve currencies in light of recent geopolitical manoeuvrings.