GBP Points South After Weak UK Data And Widening Trade Deficit
- UK trade deficit widens due to an increase in imports of ‘erratic goods.’
- GBP weakens on poor manufacturing and industrial production data.
The UK visible trade balance widened in February to -£12.46 billion from -£11.98 billion (revised) in January. The deficit on trade in goods and services widened to £3.7 billion in February 2017 from a revised deficit of £3.0 billion in January 2017, predominantly due to an increase in imports of erratic goods, according to the Office for National Statistics (ONS) release.
Commenting on today’s short-term indicators data, ONS senior statistician Kate Davies wrote, “While manufacturing was broadly flat in February, unseasonably warm weather reduced gas and electricity seun, pulling down overall production.The overall trade deficit worsened, but excluding erratic items the picture improved, as imports fell more than exports. There were small falls across a range of construction subsectors for the second month running, following a record performance for the industry at the end of 2016.”
UK industrial production year-on-year fell to 2.8% from a prior 3.3% and against expectations of 3.7%, while manufacturing production came in at 3.3%, missing expectations of 3.9% but beating January’s revised lower figure of 2.6%.
GBPUSD fell on the release with cable dropping to 1.24300 from 1.24700 as the latest batch of hard UK economic data points to a hard start to 2017.
Chart: GBPUSD 5-Minute Timeframe (April 7, 2017).
--- Written by Nick Cawley, Analyst
To contact Nick, email him at Nicholas.email@example.com
Don't trade FX but want to learn more? Read the DailyFX Trading Guides
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.