2nd August 2010 Pension Foreign Exchange Report QROPS & QNUPS

We continue our daily look at factors affecting currencies allowing some insight into market conditions affecting exchange rates. Cash and income timing for UK Pensions and QROPS should be considered to maximise the Pension, QROPS and investment income and benefits taken.  

Investment market volatility and currency exchange remains a challenge. Things are still very volatile and we are in unique global influencing territory.  In conjunction with investment returns, currency exchange continues to concern many expats with UK Pensions, QROPS and now QNUPS.    

Sterling hit a new five month high against the US dollar on Friday; it was driven by an increase in risk appetite at month end. Investors were unconvinced that weak US economic data meant that the US was set for a double dip recession, driving risk appetite higher.

Official data showed the U.S. economy grew 2.4% in the second quarter. While the figure was weaker than forecasts, some in the market were pleased to see an upward revision in growth for the previous quarter.

By late afternoon sterling had climbed to $1.5697 its strongest since mid February.

Sterling was also given a helping hand by Merger & Acquisition - related demand after an offer by billionaire Li Ka-Shing to buy UK power grids from France's EDF for £5.8 billion.

Over the weekend the month end demand to sell dollars continued to push sterling higher against the Greenback with a weekend high of $1.5782 hit first thing this morning.

Sterling was also doing well against the Euro with the Euro falling to its weakest in about a month, falling nearly 1% on the day. On Friday sterling topped 1.2035 in afternoon trade, however, similar to the US dollar, the weekend trade proved positive for sterling with a fresh high of 1.2071 hit at 08.30 this morning.

Sterling was poised to end the week well above $1.5545, the 200-day moving average which the UK currency broke above earlier last week. Analysts said that this would maintain upward momentum for the UK currency.

To end the month a survey at the end of last week showing UK consumer confidence at an 11-month low in July was largely ignored by sterling. It followed weak UK housing data on Thursday but it contrasted with recent upside surprises in UK data with second quarter GDP and July CBI retail sales the standout releases which have helped sterling finish the month on the front foot. 

The week ahead 

UK PMI this morning and the next few days for construction and services, tomorrow we have the Halifax house prices. On Thursday we have a UK interest rate decision and a busy day Friday with a host of data most notably Producer Price Index. 

Gerard Associates Ltd advises expats and people considering living abroad on the technical and currency options available for Pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pensions, investments, currency exchange and guidance on taxation in most popular ‘sunnier’ climates.   This with the re-assurance and security of UK authorised and regulated advice – essential tools for your security.