Trade Balancing Acts
The Pound had a much stronger day against the Dollar yesterday after a choppy start to the trading day. GBP has pushed confidently higher against the Greenback and even continued this morning as we have opened, presenting opportunities for USD buyers . The GBPEUR story was far more balanced with only minor appreciation to report.
The data sets delivered yesterday saw the UK Trade Balance narrow, which is a positive sign we touched on in yesterday’s commentary. Ultimately, it is positive for other countries to buy your goods with your currency and, in a very broad sense, this can be viewed as a sign that more of this is happening. UK exporters overall will have faced difficulties from a lower appetite from the Eurozone of late and so the data will be welcome news as it shows a turnaround for these businesses.
Eurozone GDP arrived at precisely the figures forecast – the last few trading days have the GBPEUR exchanging neutrally. The underlying data reflected that household demand and investment contributed the most to the growth in the Eurozone. However, there certainly was some more troubling data in the mix too. Trade figures, for example, showed that imports are growing twice as fast as exports, when viewed quarterly and the biggest economy in the bloc, Germany, grew 0.3 percent by quarter.
To the wires, then, and we are due to learn of the GBP Manufacturing and Industrial Production figures imminently – where forecasts are for a reduction across the board. We then have the next National Institute of Economic and Social Research forecast for GDP. You might recall that last time they made the estimate it was a reduction (around the time of the election) and productivity was highlighted as a principle concern. The Bank of England Governor, Mark Carney, will talk today as well, followed by a House Price Balance figure from the UK.