Lloyds

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 recent run of strong UK data has seen sterling make gains across the board over the last couple of weeks. Yet this run seemed to ground to a halt as the UK saw a weaker than expected reading of the UK services sector, it highlights the UK economy may struggle to match the growth it achieved in the first half of the year. The official reading grew in July at its slowest rate in 13 months achieving a reading of 53.1 from 54.4 in June.

The pound reached a day high of €1.2081 up from the low of €1.2041 against the euro.

Against the dollar sterling reached a session high of $1.5962 just down on the 6 month high of $1.5968 achieved on Tuesday but was still up for the session low of $1.5863. The dollar is still under broad selling pressure over the ongoing concerns of the US economy’s recovery especially after speculation we may see the Federal Reserve take further steps to try to lower borrowing costs. But many analysts believe there is a key resistance level at $1.5968 and we may see sterling struggle to push through that level into the $1.60’s.

The pound also found support from a rise in UK house prices which were up 0.6% in July and showing a recovery from the fall we saw in June. The recent reports from some of the major UK banks have all lifted sterling’s outlook with many banks reporting substantial profits on the half year; these banks include Lloyds, HSBC and Northern Rock. These are all positive signs for the UK as a country we are heavily reliant on the banking sector.

Elsewhere the US saw some positive non manufacturing data which came in at 54.3 higher then expectations of 53.8, this was followed by better than expected employment data which came in at 42k against the previous figure of 13k, this helped the dollar make gains against sterling in the afternoon session as it re traced some of its losses by 0.5%.

In the euro zone retail sales were released for both Month on month and Year on year for June. The reading came in lower at 0.0% against the last reading of 0.4% the Year on year figure fared better coming in at 0.4% against expectations of 0.1%.

All eyes will be on the Bank of England’s two day monetary policy meeting which started yesterday, today they will release their interest rate decision with many believing we will still see a hold of interest rates are the current record low of 0.5% (confirmed). What will be of interest is to whether any other policy makers agree with Andrew Sentence into voting for a rate increase to 0.75%.

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.