Foreign exchange: Pound sterling boosted as UK trade comes in better than expected

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Category: Exchange Rates

Published on Tuesday, 11 September 2012 10:03

Written by Rob Samson

The pound sterling (Currency:GBP) was found support in tricky market conditions this morning as some good economic news was released out of the UK concerning the balance of trade.

It was shown that Britain's trade deficit was smaller than expected in July, thanks to a surprise improvement in trade with countries outside the EU.

The GBP/EUR exchange rate has recovered to 1.2518 while the GBP/USD exchange rate is at 1.6014.


Britain's deficit of goods and services was recorded at £1.5bn in July. That's a 17-month low, and better than June's £4.333bn.

The goods balance with the 27 countries within the EU was -£4.2bn, better than June's -£4.9bn. But the big improvement was in trade with the rest of the world, where the balance was the smallest since October 2005 at -£2.8bn, from -£5bn in June.

Britain's traditional surplus in Services exports came in at £5.6 billion.

Howard Archer of IHS Global Insight commented:

"The sharply reduced trade deficit in July suggests that net trade could well make a rare recent positive contribution to GDP in the third quarter after being a major contributor to the contraction suffered in the first half of 2012."