On Wednesday, the GBP/USD dropped as investors resorted to the dollar as a refuge after a Chinese report which showed that exports grew by the weakest pace in seven months, which raised concerns the sluggish global growth pace would continue. Chinese trade surplus narrowed to $14.51 billion in September from $17.76 billion in August as exports slowed to 17.1%, the weakest pace in seven months, from 24.5% and imports slipped to 20.9% from 30.2%.
In the meantime, investors are still cautious that European leaders would not be able to contain the debt crisis ahead of the important European Council meeting on October 23. The ECB said the participation of private-sector banks in bailing out debt-trapped nations would yield in financial instability, noting that the turn is now on the European governments after the ECB had supported banks from collapsing since the start of the financial crisis.
On the other hand, the improvement in U.K. trade data could not give a strong upside push to the pair which remained affected by the general sentiment. U.K. visible trade deficit narrowed to 7768 million pounds in August from the revised 8156 million pounds deficit in July.
Exports surged 0.6% to 25.5 billion pounds while goods imports slipped 0.7% to 33.3 billion pounds. Still, there are speculations that the BoE may need to add more to the Asset Purchase Facility to bolster growth which is weighing on the pound. On Friday, the week ends with the release of some fundamentals from the U.S. which are retail sales for July, University of Michigan confidence for August and business inventories for June at 12:30 GMT, 13:55 GMT and 14:00 GMT respectively, while the U.K. lacks fundamentals.
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