Pound Rises As U.K. Trade Deficit Hits 5-month Low

The British pound strengthened against the other major currencies in the European session on Friday, after the U.K. visible trade deficit narrowed considerably to a 5-month low in October.

Data from the Office for National Statistics showed that the U.K.'s deficit on trade in goods fell to GBP 9.7 billion from GBP 13.8 billion in September. This was the lowest since May, when the deficit was GBP 8.5 billion. Economists had forecast a shortfall of GBP 11.8 billion.

This narrowing reflected a GBP 2.1 billion increase in exports to GBP 26.8 billion and a GBP 2.0 billion decrease in imports to GBP 36.5 billion.

At the same time, the balance of trade in services decreased to GBP 7.7 billion from GBP 8 billion. As a result, the total trade deficit fell to GBP 2 billion from GBP 5.8 billion in September.

Meanwhile, the U.K. construction output dropped 0.6 percent in October from September, when it climbed by revised 0.9 percent. Output was forecast to grow 0.2 percent. On a yearly basis, growth in construction output eased to 0.7 percent from 2.5 percent in September. Economists had forecast a 0.1 percent fall.

In the Asian trading today, the pound held steady against its major rivals.

In the European trading, the pound rose to a 3-day high of 0.8416 against the euro, from an early low of 0.8457. If the pound extends its uptrend, it is likely to find resistance around the 0.81 region.

The pound advanced to 1.2619 against the U.S. dollar, 144.39 against the yen and 1.2819 against the Swiss franc, from early lows of 1.2554, 143.34 and 1.2761, respectively. The pound may test resistance around 1.28 against the greenback, 147.00 against the yen and 1.29 against the franc.

Looking ahead, U.S. wholesale inventories data for October, U.S. University of Michigan's preliminary consumer sentiment index for December and U.S. Baker Hughes rig count data are set to be published in the New York session.

At 8:00 am ET, European Commission President Jean-Claude Juncker, European Parliament President Martin Schulz, Netherlands Finance Minister and Eurogroup President Jeroen Dijsselbloem and other officials are scheduled to speak at the 25th anniversary of Maastricht Treaty, in Maastricht, Netherlands.

At 10:15 am ET, European Central Bank Executive Board Member Benoit Coeure is expected to participate in a panel discussion on "Policy Responses: Restoring Public Trust in Economic Reforms" at a conference on "Challenges to More Sustainable and Inclusive Growth in Europe", hosted by the Council of Europe Development Bank, in Paris.