U.K. Trade Deficit Narrows, Manufacturing And Industrial Production Improve In December

After markets were mixed and fluctuating heavily, the United Kingdom released the trade balance and the industrial and manufacturing production figures for December, which added positivity to the market and supported the sentiment to improve slightly, yet cautiousness is still seen as markets are waiting for the European Central Bank and the Bank of England rate decisions.

Optimism dominated the market after the data showed that the U.K trade deficit narrowed beyond expectations in December, where we can see the British FTSE 100 is trading in Green with 0.37% of 21.94 points of gains, reaching in total to 5897.87 point, while the royal currency was able to record gains against the low yielding U.S. dollar, despite speculation that the Bank of England will add more stimuli today, where the GBP/USD pair is currently trading around $1.5854 compared with the opening level of $1.5815.

The trade figures for December improved, where the visible trade deficit narrowed beyond expectations to 7.111 billion pound from 8.908 billion, led by the improvement seen in the non-EU trade balance, where the deficit narrowed to 3.748 billion from 5.037 billion.

The total balance remained almost unchanged; accordingly, the improvement seen in the goods trade balance led the total deficit to narrow to 1.109 billion pound from the previous 2.830 billion.

For the industrial and manufacturing production for December, the industrial production index, which measures the changes in output from all industrial sectors including manufacturing, mining and utilities, expanded by 0.5% from the prior drop of 0.7%, beating estimates of 0.2%. At the same time, the manufacturing production index, which only measures the changes in output from the manufacturing sector, expanded by 1.0% from the prior drop of 0.2, also better than expectations.

In general, we expect markets to remain volatile and to fluctuate heavily ahead of the Bank of England and the European Central Bank rate decisions and also ahead of the ECB president Mario Draghi press conference amid the unsolved Greek debt-talks and negotiations with the private sector and international lenders.