The UK’s current account deficit was £28.7 billion in Quarter 2 (April to June) 2016, up from a revised deficit of £27.0 billion in Quarter 1 (January to March) 2016. The deficit in Quarter 2 2016 equated to 5.9% of gross domestic product (GDP) at current market prices, up from 5.7% in Quarter 1 2016. The widening in the current account deficit was mainly due to a widening in the deficits on trade and secondary income, partially offset by a narrowing in the primary income deficit. The total trade deficit widened to £12.7 billion in Quarter 2 2016, from £10.0 billion in Quarter 1 2016. This was due to the trade in goods deficit widening by £1.8 billion and a £0.9 billion narrowing in the trade in services surplus.
The primary income deficit narrowed to £10.0 billion in Quarter 2 2016, from £11.5 billion in Quarter 1 2016. The narrowing was mainly due to a narrowing in the deficit on direct investment, partially offset by a slight widening in the deficit on portfolio investment. The deficit on secondary income widened by £0.5 billion, from £5.5 billion in Quarter 1 2016 to £6.0 billion in Quarter 2 2016. This was due to payments increasing while receipts were virtually unchanged.
Sterling is currently being traded around 1.3120 handle. Pair is likely to find support around 1.3050 area and resistance above 1.3150 level.
