Labor

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.

Friday saw yet more weak UK data after the British service sector reported its slowest growth since April 2009; the actual figure came in at 51.3 against expectations of 52.8 and lower then the last reported figure of 53.1.

Although the figure is still above 50 which shows growth overall, it does highlight concern the UK economy may slip back into recession and that the Bank of England may need to resort to further quantitative easing which has affected sterling negatively in the past. The survey also reported a fall in hiring new employees as companies seemed concerned how the public spending cuts and slowdown to the global recovery would affect business.

Sterling started the day making gains across the board against majority of its trading pairs but after the release sterling turned on its back foot as it raised continued concerns over the economic growth for the remainder of the year. These losses seemed fairly limited as the pound seemed to keep recovering before again retracing its forward steps.

Sterling hit an early session high of €1.2048 before retracing to hit the low of €1.1983 against the dollar sterling hit a day’s high of $1.5457 against the earlier low of $1.5391.

There was further bad news for the UK on Friday, with figures showing new construction orders tumbled 14% in the second quarter and dropped 9% on the year, their first decline in more than a year.

Retail sales were released in the euro zone which showed their month on month figure slightly down at 0.1% against the previous release of 0.2%, the year on year figure came in at 1.1% down from the previous release of 1.2% but certainly better than the expected figure of 0.6%.

In the US employment data was released with Nonfarm payrolls coming in better than expected for July at a revised figure of -54k against the previous figure of -131k. This is the third month in a row that jobs have been lost in the US. However the private sector created 67k jobs which exceeded expectations. The rate of unemployment now stands at 9.6% against the last release of 9.5% but many analysts feel that the high level of unemployment is undermining the US economic recovery. This was followed by non manufacturing index which fell to 51.5 down from 54.3 but yet still showing growth. Recent economic data has raised concerns about the strength of the US economy’s recovery and thus shining the spotlight of the global recovery.

Elsewhere the euro hit a two week high against the dollar reaching a day’s high of €1.2888 against the earlier low of €1.2809.

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.

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 reversed early losses to jump more than a cent against the dollar and half a cent versus the euro yesterday after unexpected strong UK retail sales data, which has now raised hopes and fuelled sentiment that the British economy can maintain its momentum in the third quarter.

"The retail sales data were way stronger than expected and genuinely good numbers. There weren't any 'funny' factors which boosted the reading," said a currency strategist.

The Office for National Statistics said retail sales had risen by 1.1% on the month, the strongest growth since February and had by far exceeded analyst forecasts of a 0.4% rise.

On the year, retail sales rose 1.3% in volume terms, again above forecasts of a 0.6% rise.

These better than expected figures were also supported by a rise in factory orders to a two year high which now bodes well for the recovery after exceptionally strong second-quarter growth and alleviated concerns that the economy would eventually lose steam.

Despite this uplifting data, the majority of economists still believe the UK economy will continue to deteriorate in 2011, and the Bank of England reported a further decline in business and mortgage lending as well as the weakest annual broad money growth in 27 years.

Other data released yesterday in the UK by the Bank of England, showed money supply grew at the slowest pace since at least 1983 and bank lending contracted for a ninth month, suggesting a credit squeeze may be becoming more entrenched.

M4, the broadest measure of money supply, expanded 2.3% in July from a year earlier. That’s the lowest rate since monthly date started. The number of mortgage loans granted by a six bank lending panel fell to 47,000 from 48,000 in June, a 14-month low. Loans to small and medium sized businesses contracted 2% on the year.

Figures from the National Statistics showed Public Sector Net Borrowing also fell in July as corporation tax receipts bounced back sharply from last year.

Public Sector Net Borrowing came in at £3.1bn in July, down from £5.5bn in the same month and below the expected figure of £4 billion. The data suggest public sector deficits have peaked and are slowly moving in a downward trend.

Important figures in the US yesterday showed the number of Americans filing initial claims for jobless benefits increased by 12,000 last week, pushing the total number above the half million mark. It's the first time since November that initial claims have been above the

500,000 mark. It was also the fourth increase in five weeks and shocked analysts, who had anticipated a reasonable drop.

Initial jobless claims have declined steadily for the past year from a peak of 651,000 in March

2009 as employers reduced the number of redundancies and began hiring. Economists were looking for the number to fall below 425,000 and stay there before assuming that the economy was actively creating new jobs. 

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 QROPS 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.

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.    

The UK saw positive employment data yesterday showing fewer UK citizens were claiming jobless benefit in June than the figure that was expected, whilst the number of people in employment rose by the highest level in almost four years, this was helped by a record rise in part time workers. The U.K.’s unemployment was at 2.47 million in the quarter up to May, declining for the first time since January, the Office for National Statistics said. The number of people claiming benefits in June fell by 20,800, compared with the forecast of 20,000. These are encouraging signs but yet there are still some concerns over the future job outlook.

The data helped sterling make gains across the board most notably against the dollar as it hit a two month high of $1.5294 up from the session low of $1.5173. Sterling was helped after the release of strong earnings for Intel Corp on Tuesday which pushed stock markets higher and reduced the demand for the Greenback in Asian trading as investors turned their attentions to more risky assets.

Against the euro, sterling hit a day’s high of €1.2016. Up from the day’s low of €1.1927.

Investors still believe the euros gains are only a short term trend. The key to see sterling retracing its recent losses will be whether the UK data releases will be strong enough to sway Bank of England members to follow Andrew Sentence to vote for an increase in interest rates.

In a speech on Tuesday, Sentance said the Bank of England should start raising rates because economic conditions were improving, while adding that any tightening should be only gradual.

The markets were still very volatile throughout the day as the initial gains eased as the day went on after the UK FTSE 100 index fell by 0.4% as concerns continued over the banking sector which weighed heavy on financial stocks..

In the euro zone Consumer Price Index data was released for both month on month (MoM) and year on year (YoY). This showed little surprises as the figures came in as expected. Industrial Production data did not fair as well as both MoM and YoY figures were lower the previous releases.

In the US Retail Sales were released which fell by -0.5% in June against the previous released figure of -1.1% this reinforces sentiment in the market with regards to the recent run

of weak data coming from the US.

The euro rose to a two month against the dollar of $1.2776 this was helped after ratings agency Fitch confirmed they now had a stable outlook on Spain’s credit rating.

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 to avoid the offshore casino.