The pound retained its late Asian session's bullish trend in early European deals Wednesday after a report showed that the U.K. trade deficit narrowed in the month of November.
The U.K. visible trade deficit narrowed to GBP 9.2 billion in November from GBP 9.5 billion in October, the Office for National Statistics reported today. However, it came worse than expected by economists who called for a GBP 9 billion deficit.
Exports were up 2.9 percent month-on-month or GBP 0.7 billion and imports climbed 1.1 percent or GBP 0.4 billion.
The deficit on trade in goods was partly offset by a surplus of GBP 5.7 billion on services in November.
The total trade deficit decreased to GBP 3.5 billion in November from GBP 3.7 billion a month ago.
Meanwhile, the British shop price inflation remained at 1.5 percent for a third consecutive month in December, but food inflation eased noticeably, a report from the British Retail Consortium (BRC) showed today.
Economists expected the shop price index to rise 1.7 percent year-on-year. Food inflation fell to 4.1 percent in December from 4.6 percent in November.
Non-food prices were broadly flat after falling 0.3 percent in November, BRC said.
Separately, data from a survey by the Recruitment and Employment Confederation and KPMG showed that job placements in the United Kingdom increased at a slower pace in December.
The U.K. stock markets are trading moderately higher as the U.S. earnings season got off to a positive start, with Alcoa reporting fourth-quarter sales topping analysts' estimates. The company's quarterly earnings also came largely in line with expectations. The FTSE 100 index is currently gaining 0.3 percent.
Investors also shifted their focus to Thursday's central bank decisions from both the Bank of England and the European Central Bank.
The pound jumped to 2-day highs of 0.8136 against the euro and 1.4867 against the Swiss franc around 5:00 am ET.
The current trend shift for the sterling seems to have a correction in both pairs as they are diverting well-below its trend-line resistance levels.
If the British currency maintains its temporary corrective trend, likely support levels are seen at 1.48 against the Swiss franc and 0.8190/0.82 against the euro.
Any probable bullish extension could help the pound revisit the upside target levels at 1.4940 against the Swiss franc and 0.81 against the euro.
Bouncing back from early Asian session's 9-day low of 139.43 against the yen, the pound touched a session's high of 140.92 in the early London session on Wednesday.
Further upside momentum could help the sterling challenge previous week's fresh multi-year peak of 142.78.
The pound also maintained its short-term bullish trend against the US dollar, rising as much as 1.6077 before leveling off around 4:30 am ET.
The cable is likely to remain in consolidation in the near-term within a 100-pip range between 1.60 and 1.61.
by RTT Staff Writer
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