With only a few months remaining before the deadline for delivering Brexit by October 31 the most recent data of the current account of the country point to a concerning ongoing trend that could potentially have injurious consequences for the national economy in the long-term. In its report from earlier today, the Office for National Statistics noted that:
“The UK current account deficit widened by £6.3 billion to £30.0 billion in Quarter 1 (Jan to Mar) 2019, or 5.6% of gross domestic product (GDP); the fifth-highest on record as a percentage of GDP. […] This marked the fifth consecutive quarter of deterioration for the UK's total trade deficit; the last time the UK's trade deficit was over 3% of GDP Quarter 2 (Apr to June) 2002. ” [source]
Despite the UK's rising trade deficit woes, the prospects for the British economy are still redeemed by the expanding economic growth rate, which negates some of the investors' concerns. During Q1 the economy at a rate of 0.5%, which is an improvement of 0.2% for Q4 of 2018. For as long as the economic growth rate manages to outpace the bulging trade deficit, the economy can rely on somewhat level of sustainability.
Image source: TradingEconomics.com
Even though the current account deficit topped £30.0 billion from the previous rate of $20.3 billion, investors were gearing up for worse-off final results around £32 billion, which further eased the tension for the time being. Overall, the GBP rose with 0.30% against the USD and is currently testing the resistance level of the pair's mid-term range.
Image source: Trendsharks ©, created with TradingView.com
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