Forex News – UK trade deficit grows less than forecast

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The United Kingdom’s goods trade deficit widened less than forecast in January, rising from its lowest in two years at the end of 2011, providing some optimism that the British economy is rebalancing.

The Office for National Statistics said the goods trade deficit grew to 7.532 billion pounds in January – versus forecasts for 7.88 billion pounds – from 7.184 billion pounds in December, which had been the lowest since December 2009.

Data showed 2 percent monthly rise in exports prevented a bigger widening in the deficit, with a sharp rise in exports to non-EU countries more than offsetting a slight fall to the EU.   Official data showed that there was a record increase in goods exports to non-EU countries driven in part by car exports to the United States, Russia and China . Also, there was a record in oil exports in value terms due to higher oil prices.

However, with the euro-zone economy likely sliding into recession, may keep exports from rising further.

Sterling initially fell against the dollar immediately after the data, but soon rebounded to previous levels. GBPUSD fell to 1.5648 before rising back up to 1.5672 by 10:00 GMT.