Sterling may have begun the European session heading for notable five-day gains against peers like the US Dollar and Euro, but after trade balance figures for the UK were published the currency’s appeal dimmed.
The Pound Sterling to US Dollar Exchange Rate was in the region of 1.6078 as of 11:10 GMT.
Before the UK report was released the Pound was in line to post its most significant weekly advance against the Euro for seven months as yesterday’s ECB rate cut and Standard and Poor’s decision to downgrade France kept the common currency under pressure.
The expectation that today’s figures would show that the UK’s trade deficit narrowed in September also supported the Pound against the US Dollar.
However, the UK total deficit defied economists’ predictions by widening from 5.46 billion Pounds in the second quarter to 9.72 billion Pounds in the third, dampening the UK’s fourth quarter growth outlook and inspiring modest Sterling declines.
Imports rose by 1 per cent while exports declined by 3.5 per cent.
The trade data was in sharp contrast with that released for Germany earlier in the European session. The German report revealed a larger than expected trade surplus as a result of surging exports.
Separate figures also showed that UK construction output unexpectedly declined in September, dropping by 0.9 per cent month-on-month.
1 US Dollar is currently worth 0.6220 pence
Concerns that the UK’s less-than-impressive trade report could adversely impact the nation’s growth in the fourth quarter left Pound slightly softer against peers like the US Dollar and Euro.
Today’s report also supports comments issued by the European Commission earlier in the week regarding the likelihood of the UK’s current account deficit swelling to the largest deficit of any major industrial county in 2014.
The EC has previously stated; ‘The United Kingdom is experiencing macroeconomic imbalances, which deserve monitoring and policy action. In particular, macroeconomic developments in the areas of household debt, linked to the high levels of mortgage debt and the characteristics of the housing market, as well as unfavourable developments in external competitiveness, especially as regards goods exports and weak productivity growth, continue to deserve attention’.
Today additional Pound movement can be expected to occur in response to the week’s big data release – US non-farm payrolls.
As the report is likely to have a major impact on the Federal Reserve’s stance regarding tapering stimulus, investors will be paying it close attention and extensive market volatility may follow its publication.
Current Pound Sterling (GBP) Exchange Rates:
< Down > Up
The Pound Sterling/US Dollar Exchange Rate is currently in the region of: 1.6078 <
The Pound Sterling/Euro Exchange Rate is currently in the region of: 1.1978 <
The Pound Sterling/Australian Dollar Exchange Rate is currently in the region of: 1.7002 <
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9315 <
The US Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6220 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8352 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5878 >
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5175 >
(As of 11:10 GMT)
Comments are closed.