Case

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.   

Yesterday saw July retail sales rise at their fastest pace in 3 years, boosting Sterling to a 5 month high against the dollar.

The CBI reported a figure of 33, vastly up on analysts’ forecasts of 3. Sterling rose immediately after this data and by 09.45 was up to around €1.1924 after trading as low as €1.1880 before the data. Against the dollar sterling started off around $1.5440, and rose to

$1.5530 after the data was released.

Further progression was made by sterling over the course of the morning as better than expected bank earnings, which showed better than expected profit forecasts and a decrease in client outgoings, boosting confidence increased risk appetite for sterling and the euro.

By 12.15pm sterling traded as high as $1.5573, stop losses were triggered at the 200 day moving average $1.5557. This was the highest in 5 months and later that afternoon the pound reached a day high of €1.1978.

Some views are that consumers will find it difficult to spend in the near future as the government’s fiscal restraints kick in but following the recent GDP 2nd quarter growth the outlook looks fairly positive for sterling and should hopefully see a sustained growth over the summer.

EUR/USD started the day at $1.2962 but gained ground to $1.3047 after the positive UK CBI and as fears over the economic health of Europe continued to ease. Risk appetite was boosted as the S&P / Case-Shiller 20-city home price index printed 0.5% in May, higher than consensus forecasts of 0.2% helping the euro and other perceived riskier currencies.

It remains to be seen if UK economy and subsequently the pound can maintain the recent recovery. The National Institute of Economic and Social Research (NIESR) yesterday released a selection of new figures, on a positive note suggesting the UK economy will grow by 1.2% in 2010 and that consumer price inflation will fall back below the Bank of England’s target in 2012.

On a less optimistic note, the institute said house prices are up to 30% too expensive and are likely to decline over the first half of the decade. With those points and other collected data the NIESR is confident about the future but it weary of the many challenges lying ahead for the Government, Bank of England and the UK’s businesses and consumers.

Today members of the Bank of England Monetary Policy Committee will speak before the Treasury Select Committee. The past 3 or 4 hearings have been sterling negative, so analysts will be keen to hear the outlook from this meeting.

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.