Talking Point:
- UK Total Trade Balance (GBP/Mn): -£2418 Actual Vs -£1600 Estimated; -£2052 Prior.
- UK Visible Trade Balance (GBP/Mn): -£9204 Actual Vs -£8750 Estimated; -£8812 Prior.
- GBP/USD: Faced Losses
UK Total Trade Balance, which measures the difference between exports and imports of British goods and services, crossed the wires at £2.418B deficit for the month of May. This reading exceedingly missed market expectation of £1.6B deficit and deficit grew from the prior months’ print of £2.052B deficit. Moreover, UK Visible Trade Balance, which differentiates itself from Total Trade Balance because it does not record intangibles such as services, came in at £9.204B deficit versus £8.75B deficit estimated for the month of May. This outcome was majorly driven by manufacturers shipping fewer goods to other Eurozone nations and as shipments of oil to other countries fell. It caused UK Trade Deficit to widen the most in four months as exports languished.
Following the release of the data, the GBP/USD lost ground as the disappointing Trade Balance figures pressured the pound to dip against the US dollar by almost 13 pips. However, the reaction was relatively dismal as forex traders will likely look to Bank of England’s (BOE) Policy announcement due at 11:00 GMT, today. DailyFX Currency Strategist Ilya Spivak places confidence in BOE Governor Mark Carney and company to keep interest rates unchanged yet again, thus a non-event for the British pound.
From a technical standpoint, near-term support rests at 1.7108 (14.6% Fib Ret.) and resistance at 1.7180 (61.8% Fib Exp.). He remains flat for now as taking up the long side is premature.
