Pound Sterling (GBP) Exchange Rate eases from yesterday’s highs

The Pound exchange rate softened slightly against most of its major peers but continues to trade close to Tuesday’s peak levels.

Today’s UK trade data release created little movement in the currency as investors look ahead to Thursday’s Bank of England interest rate decision. Against the USD the Pound eased to trade close to a one-month high.

Sterling saw little upwards movement despite data showing that the UK’s trade deficit narrowed more than expected in February. According to the Office of National Statistics, the UK trade deficit narrowed to £9.09 billion, down from the downwardly revised January figure of £9.46 billion. The fall was more than economists had forecast. Most had been expecting a figure of £9.20 billion.

Exports in February fell by 1.6% to £23.547 billion, lowest since November 2010, the ONS said, while imports were down 2.2% to £32.641 billion, the lowest since April 2011.

Sterling continued to find support after the International Monetary Fund its UK growth forecast for 2014. The IMF said that it expects the UK economy to expand by 2.9% this year. Also offering support to the UK currency was the release of better-than-expected industrial and manufacturing production data.

Against the Australian and New Zealand Dollar the Pound continued to be weaker as the South Pacific currencies continued to be buoyed by increased demand for riskier assets. Concerns over the situation in Ukraine failed to dent demand for riskier options despite the USA accusing Russia of using agents and Special Forces of fermenting unrest in eastern Ukraine.

Against the Euro, Sterling was little changed.