British pound was trading slightly higher against the US dollar on Friday, following the positive data, regarding UK trade balance, as demand for the greenback was still pressured due to the lack of clarity about the future of Federal Reserves Quantitative Easing.
GBP/USD came off a session low at 1.5527, recorded at 8:12 GMT, to reach a session high at 1.5557 at 8:44 GMT, after which consolidation followed at 1.5548, up by 0.07% for the day. Support was likely to be found at 1.5460, while resistance was to be encountered at August 8th high, 1.5572.
Earlier today the Office for National Statistics reported that trade balance deficit in the United Kingdom shrank more than projected in June, decreasing to 8.100 billion GBP from 8.700 billion GBP in May, while preliminary estimates pointed a deficit of 8.500 billion GBP. Additionally, UK balance, as a result of trade with non EU countries, registered a sharply lower deficit in June of 2.650 billion GBP, far above expectations of a deficit of 3.900 billion GBP, while in May the deficit figure was revised up to 4.020 billion GBP from 4.093 billion GBP previously. Trade deficit was partially compensated by a surplus of 6.5 billion GBP from the sector of services. Goods export rose by 1.3 billion GBP to a record total 26.9 billion GBP during June, while the import figure increased by 0.7 billion GBP to 35 billion GBP. During the second quarter of the year goods export reached its highest level at a total of 78.4 billion GBP, while import of goods rose to a total of 103.3 billion GBP, which was the highest value since the three months until November 2011.
In addition, on Wednesday Bank of England Governor Mark Carney linked the bank’s monetary policy outlook to unemployment for the first time, as he tried to quell investor bets on higher interest rates. He said that unemployment was not a target and that the 7% threshold might be set aside, if low interest rates begin to pose a threat to financial stability, in case the public’s intermediate-term inflation expectations rise or if intermediate-term inflation projections rise above 2.5%.
Meanwhile, the greenback came under pressure, as recent economic data from the United States fueled the uncertainty over the future of Federal Reserve’s monthly asset purchases. Chicago Federal Reserve Bank Chairman Charles Evans said that he would not rule out the withdrawal of central bank’s stimulus measures at the bank’s meeting in September. His comments were similar to those made by Cleveland Fed President Sandra Pianalto, who has always voted with the majority during her 10 years on the Federal Open Market Committee (FOMC).
Elsewhere, the sterling was trading slightly higher against the euro, as EUR/GBP cross dipped 0.07% to 0.8607 at 9:45 GMT. On the other hand, GBP/JPY pair was almost unchanged, losing a mere 0.02% to 150.21 at 9:45 GMT.
Ultimately, the dollar index, which tracks the performance of the US dollar against a basket of six other major currencies, slipped 0.07% to reach 81.02.
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