GBP/USD Ticks Up on Improved Trade Balance

Britain had a deficit of 7.4 billion pounds in April, better than 7.5 that was expected. GBP/USD edges up before the rate decision.

The margin between the actual and the expected figures was quite small, hence the move is quite limited, although it’s important to note that this is still better than expected and better than last month’s 7.7 billion deficit.

GBP/USD was trading at 1.6435 before the release, and not it is at around 1.6450.

The deficit in Britain’s trade balance has reached a peak of 9.7 billion pounds in December, but fell since then. The trough was in February, with only 7 billion. It has stabilized between 7 to 8 billion.  

Before the release, cable traded at around 1.6450, after already challenging this week’s high of 1.6470. Earlier in the day it traded at around 1.64. The lows this week were at around 1.63. Resistance is at 1.6530, followed by 1.66. Weak support is at 1.6430. For more levels, see the GBP/USD forecast.

We later have a rate decision in Britain. Yet again, the MPC isnt expected to move on the rates. While inflation is high, the economy is still struggling. In recent months, the committee hasn’t released a meaningful statement around the rate decision, and it doesn’t hold a press conference like Jean-Claude Trichet does. So this event is likely to shake the pound, but not trigger significant moves.