Daily Insight

Sterling came under pressure yesterday as Britain's Trade deficit in goods and services remained largely unchanged at a record level of £5.7 Billion, providing further evidence that UK exports won't be able to fuel economic growth into the second quarter. In addition, UK Retail Sales showed the first decline in 5 months according to the British Retail Consortium, dropping 1.4% year-on-year in March, partly because of the timing of the Easter holiday. Sterling may be hampered with the release of UK unemployment claims this morning and forecasters are expecting an increase of 6,500 last month with the number of Britons claiming benefits rising to the highest level in almost three years to 926,000.

In the past 24hrs, the Euro has weakened against the majors as German investor confidence unexpectedly dropped for a third month in April amid concerns that consumer spending is beginning to decline in Europe's largest economy. The latest index from the ZEW centre for economic research fell to 62.7 from 63.4 in March against expectations of a rise to 65.5.

We have a significant day of data released on both sides of the Atlantic with the U.S. Trade Deficit expected to narrow to $67.5 Billion in February, following the record $68.5 Billion gap the previous month. However, we have traded as high as 1.7547 this morning despite speculation that U.S economic growth is accelerating faster than anticipated in the first quarter and if the deficit unexpectedly widened in February, we can expect further dollar weakness as we approach the significant resistance level at 1.7600.

Data Released 12th April

UK 09:30 Unemployment Claims (March)
UK 09:30 Average Earnings (3 months to February)

EUR 10:00 GDP (Q4 Final)

U.S 13:30 Trade Balance (Feb)

written by Adam Solomon