The Pound Sterling to US Dollar (GBP/USD) exchange rate tumbled close to a two-month low on Friday due to the publication of downbeat UK trade balance data and as geopolitical worries weighed upon market sentiment.
According to the Office for National Statistics (ONS), UK exports declined by 1.6% in June and imports fell by 0.4%.
The drops caused the UK’s trade deficit to widen from Mays figure of £9.15 billion to £9.41 billion in June.
The figure disappointed economists who had been widely forecasting for the deficit to narrow to £8.80 billion.
The weaker exports figure was being blamed on a fall in manufactured goods, fuels and semi-manufactured products.
Exports to the European Union remained unmoved but the deficit in trade with the region widened from £5.1 billion to £5.6 billion.
The trade data increased concerns that the UK economy is slowing down.
Trade data has consistently disappointed over recent months.
‘June’s trade data provide further provide further evidence that the economic recovery is struggling to rebalance towards the external sector. There are plenty of headwinds, which mean that exporters may continue to struggle in the near term. For one, the full effects of sterling’s appreciation over the past year have probably not been felt yet. Second, the Euro-zone’s economic recovery remains extremely fragile. Accordingly, we doubt that the trade deficit will narrow substantially over the rest of the year,’ said Capital Economics.
A separate report also released by the ONS showed that construction output in the country increased by 1.2% in June.
The figure was a rebound from the 1.2% recorded in the preceding month. The figure now sees annual growth for the sector rise to 5.3%.
Neither set of figures is expected to have a negative impact on the UK’s preliminary GDP reading for the second quarter.
The US Dollar meanwhile strengthened against all of its major peers after President Barack Obama announced that the US Air force would launch airstrikes in Iraq in an attempt to prevent the genocide of religious minorities at the hands of Islamist fighters.
Pound (GBP) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,US Dollar,1.6809 ,
Pound Sterling,,Euro,1.2548,
Pound Sterling,,Australian Dollar,1.8155 ,
Pound Sterling,,New Zealand Dollar,1.9843 ,
US Dollar,,Pound Sterling,0.5951 ,
Euro,, Pound Sterling ,0.7964 ,
Australian Dollar,, Pound Sterling ,0.5503 ,
New Zealand Dollar,,Pound Sterling ,0.5030 ,
[/table]
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