Forex – Sterling remains lower after U.K. trade data

© Reuters.  Sterling remains lower despite upbeat UK trade data – The pound remained lower against the dollar on Tuesday after data showed that the U.K. trade deficit fell to the lowest in more than a year in April, indicating that it may create less of a drag on growth in the current quarter.

GBP/USD was at 1.5291, little changed from around 1.5293 ahead of the report.

The Office for National Statistics said the trade deficit narrowed to £1.2 billion in April, the lowest since March 2014 from an upwardly revised £3.1 billion the previous month.

The goods trade deficit narrowed to £8.5 billion from £10.7 billion, also the lowest since March last year.

The U.K.’s trade deficit trimmed 0.9% off overall economic growth in the first quarter, and the economy expanded just 0.3%.

The report showed that exports rose 4.8% in April, the largest increase since September 2014.

The pound remained under pressure as concerns over the prospect of a possible British exit from the European Union weighed ahead of a referendum on EU membership due to be held before the end of 2017.

Demand for the dollar continued to be underpinned after Friday’s upbeat U.S. jobs report bolstered expectations for a rate hike by the Federal Reserve later this year.

Sterling was close to one-month lows against the euro, with EUR/GBP at 0.7380.

In the euro zone, data on Tuesday confirmed that the euro area economy grew 0.4% in the first three months of the year.

The Greek economy contracted 0.2% in the quarter, sending the country back into a recession.

Investors were continuing to eye developments in Greece after Athens submitted new proposals for economic reforms to the European Commission, fuelling hopes for a breakthrough that could unlock new funding before the country runs out of money.

The euro was steady against the dollar, with EUR/USD at 1.1290, off session highs of 1.1344.

The dollar remained on the defensive after a steep decline against the single currency in the previous session on the back of higher German bund yields and robust German economic data.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at little changed at 95.19.


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