UK’s June Trade Deficit Narrows

The U.K. trade deficit narrowed more than economists forecast in June as exports rose to a two-year high.

The goods-trade gap shrank to 7.4 billion pounds ($11.7 billion) from 8 billion pounds in May, the Office for National Statistics said today in London. The median of 17 forecasts in a Bloomberg News survey was for a 7.8 billion-pound deficit. Exports jumped 4.3 percent to the highest since June 2008, and imports rose 1 percent.

The pound has fallen about a quarter on a trade-weighted basis since the start of 2007, making exports more competitive. While economic growth accelerated in the second quarter, Bank of England Governor Mervyn King said there are risks from a possible euro-area slowdown. Policy makers may lower their growth forecasts tomorrow after last week maintaining emergency stimulus, according to economists in a Bloomberg News survey.

“At the margin this is a small improvement, but the data are volatile,” said Ross Walker, an economist at Royal Bank of Scotland Group Plc in London. “There are questions over how sustainable the recovery is in export markets. There’s a sense there’s been a loss of momentum.”

The pound rose as much as 0.1 percent against the dollar after the report, and was trading at $1.5820 as of 9:44 a.m.


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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell