Forex News – UK April trade balance narrows, Sterling rebounds

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The U.K. Trade Balance data were released this morning indicating a narrowing in the trade deficit in April. This helped the Sterling to rebound against the Dollar and Euro.

The trade gap narrowed to 7.389 billion pounds in April from 7.708 billion in March, lower than expectations for a deficit of 7.55 billion pounds.

The Office for National Statistics compiled the data with the breakdown showing a sharp fall imports of consumer goods, while exports held steady.

The findings suggest the rebalancing of Britain’s economy away from consumption is continuing, although it raises doubts about how much exports will contribute to a fragile economic recovery.

The British government was relying on exports to boost the sluggish economy.

However, strong growth in exports was contrasted by a huge decline in household spending and business investment, leaving overall first quarter gross domestic product growth at just 0.5 percent.

Upon release of the news at 08:30GMT, the Pound jumped 18 pips against the Dollar, rising to 1.6439 from 1.6457.

Against Euro, Sterling gained 80 pips from 0.8895 to 0.8887.

The focus will now be on the Bank of England policy meeting later in the day, and their decision on interest rates.