Trade Balance Deficit Shrinks — Sterling Gains

The Great Britain pound advanced today, erasing yesterday’s losses versus the US dollar, as the report showed that the increasing exports made the deficit of the UK trade balance lower than was predicted.

The UK deficit of trade balance narrowed to £7.1 billion in January, compared with the deficit of £9.7 billion in December (originally published as the deficit of £9.2 billion). The higher deficit of £8.5 billion was expected. The deficit shrank as the exports rose by £1.3 billion and the imports fell by £1.3 billion. The report tomorrow is expected to show that the manufacturing production in Britain advanced in January after the decline in December.

The economists predict that the Bank of England will keep its benchmark lending rate unchanged at 0.5 percent tomorrow. The central bank is also expected to maintain its bonds purchase program at £200 billion. It’ll be interesting to see how much of the bank’s policy makers this time will vote for an increase of the rates.

GBP/USD advanced from 1.6159 to 1.6242 today and traded near 1.6196 as of 21:15 GMT. GBP/JPY traded at about 133.94 after it rose from 133.54 to 134.27.