The UK's trade reflects that goods imports climbed by £1.97 billion (3.9 percent), while exports climbed £1.88 billion (6.6 percent) over the month, leading to a slight widening of the overall trade deficit. The expansion was broad-based, with imports and exports rising to both EU and non-EU markets. Notably, exports to the United States grew by £0.8 billion, buoyed by precious metals, though they remain below pre-tariff levels, underscoring lingering trade frictions. Over the month, the total trade deficit widened to £22.24 billion.

The data suggest a dual narrative such that stronger export performance signals opportunities for global competitiveness, yet persistent goods deficits highlight structural vulnerabilities in manufacturing and supply chains. Services remain the UK's anchor, but their ability to counterbalance widening goods deficits may face limits if import growth continues to outpace export gains. This latest update takes the RPI to 11 and the RPI-P to 5, meaning that economic activities adjusted for prices are within the expectations of the UK economy.

The trade gap is expected at Stg 21.7 billion in July versus Stg 22.2 billion in June.

The merchandise trade balance measures the difference between imports and exports of goods. The level of the international trade balance, as well as changes in exports and imports, indicate trends in foreign trade and can offer a guide to an economy's competitiveness. Data are supplied by over 30 sources including several administrative sources, HM Revenue and Customs (HMRC) being the largest.

Changes in the level of imports and exports, along with the difference between the two (the trade balance) are a valuable gauge of economic trends here and abroad. While these trade figures can directly impact all financial markets, they primarily affect currency values in foreign exchange markets.

Imports indicate demand for foreign goods and services in the UK. Exports show the demand for UK goods in countries overseas. The pound sterling can be particularly sensitive to changes in the trade deficit run by the United Kingdom, since the trade shortfalls create greater net demand for foreign currencies. The bond market is also sensitive to the risk of importing inflation. This report gives a breakdown of trade with major countries as well, so it can be instructive for investors who are interested in diversifying globally. For example, a trend of accelerating exports to a particular country might signal economic strength and investment opportunities in that country.

The UK's trade balance is particularly susceptible to swings in the oil account and so within the overall goods balance, financial markets will normally focus on the balance excluding oil and other erratic items.