U.K. Trade Balance Widens As Imports Outpace Exports

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EUR/USD –  The German trade balance slipped to 13.5 billion from 17.2 billion as imports outpaced exports. An improving economy translated into a 4.5% increase in domestic demand for foreign goods, surpassing estimates of 3.0%. Although exports lagged, demand from abroad grew 3.0%, beating forecasts for a decline of 0.1%. Meanwhile, the final reading for German consumer prices were in line with earlier accounts showing a 0.6% decline on the month and the annualized rate at 0.8%. The lack of price pressures in the region’s largest economy will allow policy makers to maintain record low interest rates in order to ensure a return of growth.  To discuss this and other topics, please visit the EUR/USD Forum.

GBP/USD –  The U.K. visible trade balance widened to 7.3 billion pounds which was the widest in almost a year, as imports rose faster than exports. Imports rose 5.2 percent, while exports climbed 4.5 percent on the month. The BoE is expecting a weak sterling to continue to generate demand for goods which should help bring balance back to the economy. Policy makers continue to see a “gradual recovery”  as slack remains in the economy. The MPC has left the door open for more quantitative easing after pausing their asset purchase program signaling that interest rates will remain on hold over the near-term. To discuss this and other topics, please visit the GBP/USD Forum.