UK exports hit by strong pound as trade deficit widens

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The UK's trade deficit widened in June as the strong pound hit exporters – although the £1.6bn figure was still considerably lower than the March's six-month high of £3.2bn.

Exports fell £300m to £24.9bn, while imports rose £500m to £34.1bn, a release by the Office for National Statistics showed today.

As the Eurozone continued to feel the heat from the Greek crisis, exports to the region rose 0.2 per cent on the previous month, rising 1.9 per cent quarter-on-quarter. However, they were 9.5 per cent lower than the same period the year before, suggesting buyers were unsettled.

"This ties in with belief that sterling's strength against the euro is hampering UK exporters' ability to take advantage of improved domestic demand in the Eurozone this year," said Howard Archer, chief European economist at IHS.

He also pointed out import prices for traded goods dipped 0.7 per cent month-on-month and 6.2 per cent year-on-year. 

"Given that oil and commodity prices weakened markedly in July and sterling strengthened further, import prices have likely come down further since – this is something that the Bank of England is keeping a close eye on and if the trend persists, it would increase the chances that the Bank of England will delay raising interest rates past the first quarter of 2016."