Figures Reveal Wider Than Expected UK Trade Gap, Piling Pressure On The Pound

Published: Tuesday, 9 April 2013 16:00 BST - Written by John Cameron

STORY LINK Figures Reveal Wider Than Expected UK Trade Gap, Piling Pressure On The Pound

This morning brought a mixed bag of UK data releases. February’s Industrial Production data was ‘less bad’ than had been anticipated, showing at -2.2% versus analysts’ expectations of a -2.8% print, while British Manufacturing Production figures for February came in bang on expectations at -1.4%. On a busy morning for those with Sterling interests, the latest domestic UK Visible Trade numbers showed that the UK economy posted a larger than expected trade gap of £9.416bn in February alone. During a month when the Pound was at a low ebb versus the euro and US Dollar, (a fact which would ordinarily cause the nation’s trade gap to narrow), the figure points to a fundamental structural lack of resilience in Britain’s economy – a considerable worry for holders of the Pound moving forward.

Elsewhere, the risk-driven currencies have made a comeback on the day. The Pound Australian Dollar exchange rate (currency : GBP AUD) has pulled back into the 1.4500s, while the Pound to New Zealand Dollar exchange rate (currency : GBP NZD) is currently teetering just above the psychologically key 1.8000 level. Support for the high-yielders has been driven by a generalised improvement in risk sentiment amongst the investment community on the day. North Korea has dampened down its war talk and now appears to be concentrating its efforts on disrupting output from the Kaesong Industrial Complex – a joint project with South Korea. The downgrading of Pyongyang’s recent outburst from potential pre-emptive nuclear attack to a localised labour dispute has afforded the Australian and New Zealand Dollars the opportunity to regain their composure against the other major global currencies. Tonight’s Chinese New Yuan Loans data will give the two Antipodean currencies renewed direction largely due to Australia and New Zealand’s heavy dependence on the exports of their plentiful raw materials to Asia’s largest economy.

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