Today, the UK Office for National Statistics posted the trade figures for August. It shook optimism of experts as trade balance deficit widened in August.
The UK trade balance report reads that seasonally adjusted trade balance deficit came in at 11.15 billion pound sterling in August from 12.20 billion pounds in July.
According to flash estimates, trade deficit was expected to be 10.00 billion pounds. The foreign trade report was published the next day after the Bank of England had announced that it would keep the key interest rate unchanged at 0.5%. This decision came as no surprise. Besides, the central bank stated that it maintained the size of the Asset Purchase Program at 375 billion pounds sterling. According to the minutes, the Monetary Policy Committee suggests that for several years further decisions on the interest rates will depend on the current economic situation. In light of the feeble data on the UK trade balance, the British pound halted strengthening against the US dollar and tumbled from a two-week high.
The pound/dollar pair dropped from 1.5383, the highest level since September 22, to the mark of 1.5346. The, it rose 0.01%. The pair is likely to receive support at the level of 1.5257, a Thursday's low, and resistance at the level of 1.5456, which is a high hit on September 15.
Nevertheless, the pound sterling managed to take advantage of the US dollar weakness. The US currency was undermined by the latest minutes of the Federal Open Market Committee meeting. Earlier, the US regulator determined a set of economic conditions as criteria for a decision on the interest rates hike. Despite meeting these criteria, the members of the rate-setting committee are still hesitating to tighten the monetary policy.