Barclays

At Gerard Associates Ltd we continue our daily look at factors affecting markets and currencies allowing some insight into conditions affecting exchange rates.

Cash and income timing from a UK Pension income drawdown, flexible pensions or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension drawdown, QROPS and investment income taken.

Investment market volatility and currency exchange remains a challenge. The global economics are volatile and unprecedented in history. Currency exchange continues to concern expats with UK Pensions, income drawdown now including flexible pensions, a QROPS and QNUPS (Qualifying non UK Pension schemes).

IN THE UK

• The Bank of England Quarterly Bulletin was held yesterday and confirmed the gloomy outlook for the UK economy. Unemployment has remained higher than before the recession, and credit conditions are still tight.

• The pressure on household finances intensified in December, with new figures showing the squeeze is now heading towards the record levels recorded in August.  Britain's recovery from the recession of 2009 has been slowed by falling consumption "reflecting the challenging environment facing  households".

• Data showed 56% of households reported a fall in deposable income in the last 12 months whilst only 13% saw a rise.

• UK Chancellor, George Osborne, believes the economy will grow 0.9% this year and just 0.7% in 2012. This figure has been revised downwards twice in the last 12 months. He announced new regulations covering UK banking. Very simply, retail and investment banking will be separated within banking institutions to help avoid the problems seen in 2008 when Northern Rock, RBS, Lloyds and HBOS hit the headlines.

• Yesterday’s news was not all bad as Dr Howard Archer, chief UK economist IHS said November's dip in inflation to 4.8% from a three-year high of 5.2% in September should mark a step in a substantial downward trend that will increasingly ease the squeeze on purchasing power.

• Rating agency Fitch cut several big name banks including UK based Barclays.  Concern about the UK's heavy exposure to the banking industry is likely to put pressure on the pound as trading winds down towards the year end.

ELSEWHERE

• The Euro lost further ground after Draghi admitted the law prevents him from extending the euro bond purchase programme further.

• Eurozone sovereign associated risk remains unchanged, the ECB’s new head told the EU parliament that purchases of peripheral debt were temporary and "not infinite”.  He was also downbeat on the region’s growth prospects, saying that 2012 will be a difficult year for the Eurozone's banks and that recovery in economic activity is likely to be slow.

• Following several days of intense speculation of forthcoming rating cuts, Fitch has placed France under a negative rating outlook for a possible downgrade The rating agency explains that the country has the highest structural budget deficit and more debt than its peers. This negative outlook means that there is more than a 50% chance that France will lose its triple-A rating over the next two years.

• Belgium, Spain, Slovenia, Ireland, Cyprus, and Italy were placed under credit watch negative. These countries already had a negative rating outlook so the new warnings have put their ratings at more risk. Fitch said it will reach its conclusion in January and the cut could be of one or two notches.

• Pressure is mounting on Spain after the latest set of disappointing figures were released yesterday. The bad loans rate for the Spanish financial sector rose to 7.416% in October. Overall, €131.908bn in loans were more than three months overdue and October's rate was the highest since November 1994.

• Markets opening was mixed on Monday, as news that North Korean leader Kim Jong Il died of a heart-attack circulated the markets. Although his son is expected to succeed him, the news has South Korea's military and other countries on alert at the wait for the succession to be confirmed. Asian stocks reacted with general losses.  The South Korean Kospi fell more than 5% while Japan's Nikkei fell 1.26%.

• The US Dollar rose off the back of the uncertainty versus the majors and the South Korean Won. This news has unleashed some rumours about the relationship between the two Koreas, ranging from the possibility of new confrontations to a possible unification.

• Germany, the Eurozone’s biggest contributor had promising IFO figures released this morning, all 3 components showed healthy rises. Possibly the most important European data release of the week shows that Germany is still performing well.

DATA TO LOOK OUT FOR (all times GMT)

• CBI Distributive Trade Survey is released at 11.00am in the UK, an indicator of trends in the retail and wholesale sector. The markets are expected a slight improvement from last month’s -19% to -17%

• Canadian inflation figures are released at 12.00pm, both annual CPI and Core CPI are expected to show rises to 2.2% and 2.9% respectively.

• US Building Permits are released at 1.30pm and expected to show the number of permits dropped slightly in Nov, however actual Housing Starts is expected to have risen in Nov.

• New Zealand Current Account Information is expected to show net flow of cash has

dropped significantly into the red, -$3.755bn from -$0.92bn last month.

Gerard Associates Ltd advises UK residents, expats and people considering living abroad on the technical and currency options available for Pensions, pension income drawdown, flexible pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pension including QROPS and QNUPS and investments in a clear format allowing all customers to make an informed choice.

This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.

At Gerard Associates Ltd we continue our daily look at factors affecting markets and currencies allowing some insight into conditions affecting exchange rates.

Cash and income timing from a UK Pension income drawdown, flexible pensions or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension drawdown, QROPS and investment income taken.

Investment market volatility and currency exchange remains a challenge. The global economics are volatile and unprecedented in history. Currency exchange continues to concern expats with UK Pensions, income drawdown now including flexible pensions, a QROPS and QNUPS (Qualifying non UK Pension schemes).

As the media world turned its focus to the parliamentary committee meeting featuring the

embattled Murdochs, the markets continued to reflect the lack of consumer confidence that

has animated European markets.

Germany released her ZEW figures which indicated that confidence had dropped considerably

from a negative 5.9 to negative 7.0 (but this was below the negative 7.4 forecast), leading

pundits to question how secure the recovery is. It bears remembering that the German

economy, or rather Germany, is heavily indebted, so one must watch closely for the strength

of Thursday’s European economic data.

On-going issues with regards to the budget agreements in the United States has done little to

improve the fortunes of the dollar. Sterling closed the European session at 1.6141, and

EUR/USD was just down at 1.4162. The question is whether the battle within congress over

the US debt ceiling results in a risk on demeanour coming to the market, or whether

currencies like the Swiss Franc and the Japanese Yen will continue to enjoy their status as

qualified safe havens versus the green back. One might argue that the pound has in fact

reached the peak of its limit within this range, but this will depend on the strength of the

retail sales data that becomes available later in the week.

European leaders will try to renew their strategy against the debt crisis this week. ECB

President Trichet is expected to confirm his opposition to the Greek restructuring. German

Chancellor Angela Merkel has stated that she feels both bond holders and the ECB must

participate to support Greece.

Portugal has shown the market that it is prepared to move forward with other adjustment

plans. The Portuguese Prime Minister has announced that the government will be presenting

new austerity measures before the end of August, which may bring an air of stability to the

latter weeks of summer.

IN THE <?xml:namespace prefix = st1 />UK

• The eyes of the world’s media focused on London as News Corps Executives face questions from a parliamentary committee.
• The pound loses its position against EUR slipping from a healthy 1.14 down to 1.1370 for the majority of the day’s trading.
• The morning began with London Stocks improving slightly.
• The odds of David Cameron resigning over the embarrassment of the News of the World suggestions have narrowed greatly from 100/1 to 20/1.
• Banks are attempting to energize the mortgage sector with Barclays introducing the cheapest mortgage deal in 15 years.  Conversely, first time buyers and developers are being advised to wait before purchasing.  Money Week suggests that those purchasing residential property should wait for the Royal Assent to the Finance Act 2011 because of implicit savings in Stamp Duty.

ELSEWHERE

• German ZEW survey shows that investor confidence drops in July, and that the economic outlook worsens. 
• Spain’s Treasury issues €4.45bn in debt auction.  These 12 and 18 months notes were issued with a yield of 3.76% compared to the previous 2.728%.
• Investor confidence in Germany was shown to have dropped to negative 15.1.  Sovereign debt issues in the EU and the United States debt ceiling concerns have served to dampened sentiment and can be identified as the key causes for the survey to miss it’s 11.8 forecast.
• The DAX index has fallen nearly 1.8% over the course of the past 12 months, and this did stabilise a touch over the last twenty four hours.

DATA TO LOOK OUT FOR

• Further assessment of the EU consumer confidence at 14:00 gmt
• MPC minutes will be released.  These should confirm the ration in favour or again increase of the asset purchasing facility.
• Thursday presents extensive manufacturing and services date for key European economies
• The UK releases public sector net borrowing and retail sales figures.  Retail figures should come through showing growth of 0.5, up significantly on last month’s poor figures of negative 1.4%.
• The US Federal Reserve Chairman will speak at approximately 14:00 on Thursday.  This will be complimented by both manufacturing and unemployment data.

Gerard Associates Ltd advises UK residents, expats and people considering living abroad on the technical and currency options available for Pensions, pension income drawdown, flexible pensions, QROPS, QNUPS and investments in a clear format allowing all customers to make an informed choice. Our service encompasses Pension including QROPS and QNUPS and investments in a clear format allowing all customers to make an informed choice.

This with the reassurance and security of UK FSA authorised and regulated advice - essential 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 pound fell to a six week low against the euro on Monday and saw losses against a basket of other currencies. Concerns re-emerging about the fragile state of the UK economy combined with reports that a UK clearing bank had a large buy order filled to sell sterling against the euro saw the pound fall to €1.1918 at around 12.30pm.

Rumours emerged in the city that an order in the region of a billion euros was filled earlier in the session relating to the UK's contribution to the European Union's agricultural budget.

With monetary flow in the markets generally much lower because of the Labor Day bank holiday in the US the substantial order proved to move the pound’s value  downwards.

The pound has been under pressure for the last week as disappointing data releases have now all but erased the positive sentiment after the stronger than expected 2nd quarter GDP figures. Expectations are now that the 3rd quarter will not show anywhere near as much growth and that the Bank of England may have to review their quantitative easing policy at this week’s Monetary Policy meeting.

Data showed yesterday that new car sales fell by 17.5% last month compared to a year ago and Nationwide is expected to report that house prices fell by another 0.5% in August. This follows a week where all three of the UK’s main sectors; manufacturing, construction and services grew at their weakest for over a year. The keyword is grew but during a recovery growth needs to continue at a healthy pace to really put fears of recession to bed.

The pound initially made gains against the US dollar as risk appetite drove the dollar lower.

Share prices rose dragging the risky currencies up with them as investors welcomed the US Non Farm Payrolls result on Friday which surprised many by posting a figure better than expected.

But by 2.30pm cable had fallen to a session low of $1.5358 before making a slight recovery in afternoon trading falling below its 200 and 55 day moving averages at $1.5418 and $1.5408, respectively and technical analysts said next key support is at $1.5322, the 38.2% retracement of the May to August rally. According to the Commodity Futures Trading Commission The number of large speculators and hedge fund managers betting on a sterling decline has tripled in the last week.

Against the euro the pound fell briefly below its 100 day moving average of €1.1927 after the clearing bank deal but managed to close the session at €1.1964.

The euro maintained a very range bound session against the dollar peaking at $1.2914 before closing the London session at $1.2874.

This week is relatively quiet for UK data, today sees little of any significance, tomorrow there is UK industrial production data for July which is expected to show an increase of 0.3%.

Unless there are any phenomenal surprises on Thursday the Bank of England will leave interest rates on hold and QE at £200bn on Thursday. The minutes of this meeting in fortnight’s time will prove a far more interesting read than the results itself.

Barclays said in a note to clients "Softer activity data, including last week's weaker-thanexpected PMIs, have again raised fears of a double-dip recession and strengthened the case for additional policy support.".

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.