UK trade flows in October 2025 were characterised by strong export growth alongside a widening overall deficit. Goods imports increased by 6.8 percent over the month, reflecting rising demand for products from both EU and non-EU markets. However, exports contracted rising by 0.8 percent.

The United States played a central role in this shift. Exports of goods to the US surged by 27 percent, supported by higher movements in precious metals, while imports from the US rose sharply by 51.6 percent. This suggests renewed bilateral commercial activity, possibly linked to currency movements or specific sectoral demand.
However, despite the monthly uplift, structural imbalances remain. Over the year to October 2025, the total imports of goods and services rose by 6.5 percent, while exports fell by 1.1 percent.

In essence, the latest report is one of invigorated global trading activity that is insufficient to counter deeper import-driven pressures, signalling ongoing competitiveness and cost-structure challenges for UK goods producers. These updates take the RPI to minus 32 and the RPI-P to minus 38, meaning that economic activities continue to fall behind market expectations of the UK economy.

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.