By Anton Eljwizat
What is the “Trade Balance”?
The British Trade Balance report is an indicator that measures the difference in value between imported and exported goods and services during the reported month. A positive number indicates that more goods and services were exported than imported, and hence supports the currency. As the economy steadies and oil prices climb, imports are likely to rise.
This report has two major effects on the GBP. One – foreigners that import British goods and services must buy the local currency to pay for the nation’s exports. Two – the amount of exports the nation is producing says a lot about its economy, and investors are fairly wise to know how to understand these figures. It means that investors are more likely to invest their funds in countries that have better exporting data, and therefore create more demand for the local currency, and this has a direct impact on the value of the currency.
How This Survey Can Help the British Pound?
The government report this week is expected to show that the trade balance probably widened to -6.5 billion in March, according to estimates, from -6.2 billion the prior month. Commerce will release the report on May 13 at 8:30 GMT. If the trade balance data will come in-line with expectations or higher, the GBP may see its bullish trend continue based on the trade balance’s value.
How This Survey Can Hurt the British Pound?
However, if the number will turn out to be lower than forecasted, this might weigh on the British currency since it would be consistent with fears that the British economy is at risk of entering a deeper economic recession. A negative release of this kind may actually force the GBP into a bearish correction, testing the 1.4700 level against the USD in the short-term.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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