The Office for National Statistics (ONS) released their figures for February showed that the trade deficit widen to £2.9 billion from £1.5 billion in January. The release highlighted that the trade in oil, the monthly deficit on oil was virtually unchanged at £0.7 billion in February 2015.
The release from the ONS said that exports to the European Union were at the lowest on record (since 1998) in part driven by the strengthening pound versus the Euro. EURGBP traded at a 7 year low in March, as the Euro weakened on fears of a Greek exit.
As the pound has strengthened against the Euro, UK exports become more expensive for European importers. The Eurozone is the UK’s main trading partner; the focus for the general election is on the in/out referendum proposed by the Conservative Party.
The UK’s future membership of the Eurozone is under debate due to the benefit of trade, migration and larger policy. The UK bridges the gap between the US and Europe
Bank of England
The Bank of England has left interest rates and quantitative easing unchanged as expected. The MPC has voted to leave rates at the record low of 0.50%, with the March announcement being a 6 year anniversary. The reaction in the FX markets was muted, as the announcement of unchanged was a unanimous expectation amongst traders. The minutes for the announcement will be published on Wednesday 22 April.