Trade deficit hits sterling's value in Forex

News of a larger-than-expected widening in the UK's trade deficit has had an adverse effect on sterling, one expert has observed.

According to Mark Bolsom, of Travelex, the pound took a hit in Forex trading after it was announced that the shortfall is now £7.278 billion.

It dropped to €1.1243 and $1.5582 against its European and US counterparts respectively following the release of the figure, which Mr Bolsom described as "seriously disappointing news".

Imports from non-European Union countries have climbed at the fastest rate since March 2008 and Mr Bolsom said the latest statistic suggests a double-dip recession is a "distinct possibility".
















"Lower export volumes are not going to help push our [gross domestic product] into a more robust and sustainable position," he stated, adding that the Bank of England will probably be "cautiously optimistic" in its next inflation report.

The value of the euro has also declined this week, with worries regarding the fiscal stability of some European countries causing the currency to fall against the yen and dollar yesterday.