Trade Balance is the difference between imports and exports for a country. It is a good indicator of the performance of an economy. If there is a surplus it means more money is coming into the country than leaving and hence gives the economy more strength. The UK has been running a trade deficit for many years so we know it will be negative. Quite importantly the UK’s trade deficit has been increasing over the last few months and is expected to here.
It will be interesting to see if the growth we saw in GDP data is reflected in the Trade Balance figures as this will give a clearer picture of a more generally positive tone for the UK. The GDP figures and the lack of a any QE yesterday should ensure the pound is reasonably well supported, but a wider than expected trade balance will hamper any gains.
Across the Channel this morning we have a raft of Industrial Production data for the Eurozone which has so far shown a sharper than expected fall in France (down to -2.7% versus the -1.0% expectation) but there is more data due.
With the Dollar finding strength following the election I would not be surprised to see more funds flow out of the Euro into the Dollar. President Obama is due to speak later today and this could effect movements on EURUSD which often affects GBPEUR.
All in all today I expect GBPEUR to slowly creep up this morning maybe to 1.2550 depending on how bad the trade balance figures are. And I would not be surprised to see 1.26 by the end of the day.
Anyone selling Euros looking slightly further ahead may wish to wait until the Bank of England Minutes later this month where we will see the voting pattern of the members in yesterday’s interest rate decision.
For further information on how to approach your transaction and secure the very best rates please contact me directly Jonathan Watson on 01494 787 478 or email [email protected]