Britain

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

• Royal Bank of Scotland, Britain’s biggest government controlled bank posted bigger then estimated declines in Q3 profit as Europe’s sovereign debt crisis erodes revenue from its securities unit.
• Bank of England may pause bond buying program after reactivating it last month as officials continue to monitor the Eurozone debt crisis before making their next move
• Sterling reached a session high of €1.1661 against the euro from the early morning low of €1.1545.
• Against the dollar the pound traded between the high of $1.6044 and the low of $1.5946.
• This morning in the UK, surprisingly good house prices data was published showing a rise in October of 1.2% from a fall of -0.5% in September. The pound remains slightly up on most currencies from Friday’s close.

ELSEWHERE

• The euro fell across the board on Friday after the G20 leaders failed to agree to a funding plan to support European government’s recent efforts to manage the regions debt crisis. Markets have been dominated recently by the G20 and news developing from Europe and this has resulted in a lack of risk appetite within investors.
• German Chancellor Angela Merkel commented on Friday that leaders failed to agree on IMF resources to help the regions efforts to control the debt crisis. They have agreed a plan to put in place to bolster the economic growth.
• In a G20 closing press conference French President Nicolas Sarkozy said “we will fight to defend Europe and the euro”. He said the G20 had agreed to boost the resources of the IMP and would agree on the specific steps by February. France failed to persuade the rest of the G20 to commit hard numbers to providing a bigger financial safety net for the Eurozone.
• As Greece’s status in the Eurozone looked questionable last week, Ireland and Portugal say they will do whatever it takes to remain part of the single currency
• The Canadian dollar declines after a report showed the unemployment rate in Canada rose in October to 7.3% from 7.1% as the nation eliminated positions for those searching for jobs.
• The Swiss franc weakened after the nation’s central bank reported foreign currency holdings fell to 242.7 billion francs in October from 282.2 billion francs at the end of September.
• The US dollar rose against 14 of its 16 most traded currency partners after the US unemployment rate fell to 9.0% which is a 6 month low from the previous months release of 9.1% whilst Nonfarm payrolls expanded less then forecasts coming in at 80k against expectations of 95k.
• Last night Greek Prime Minister George Papandreou agrees to step down to allow the creation of a national unity government intended to secure international funding and avert a collapse of the country’s economy.
• Asian shares struggle earl Monday as investors are nervous despite the agreement of a formation of a new Greek unity government.
• The Italian prime minister is coming under increasing pressure to step aside after contagion pushed Italy’s borrowing costs to a record high. 

DATA TO LOOK OUT FOR (all times GMT)

• Eurozone finance ministers face a tough assignment at their meeting today. Political developments in Greece and Italy overshadowed the G20 meeting, constraining any real progress on the October 26 EZ rescue plan.
• Investors will be looking at Italian bond auctions today to see how much Italian debt is rising by. 6% is seen as the key figure to show whether or not debt is considered too high, currently Italian bonds are trading at 6.6% and rising and because of political instability, Italy is under pressure to restore its credibility on financial markets.
• Eurozone Retails sales are released at 10am, expectations we are to see a fall of -0.5% which although still showing fall would be an improvement on last month’s 01.0%
• Germany releases industrial production data at 11am. 

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.

After basking in glory during Tuesday’s trading session the Pound came crashing back to

earth due to a double whammy of bad data from the UK. There was to be no positive follow

up to the unexpected increase in the PMI numbers (Services Sector) that boasted its fastest

growth in over a year.

The day began with news emerging that although house prices in Britain had risen by 0.1% in March, mortgage lender Halifax stated that its forecast for 2011 was for a 2% fall through to the end of the year. Sterling was enjoying levels close to a fourteen

month high against the US Dollar ($1.6403) and had pushed through the eleven month highs

against the JPY. At 09.30 GMT the UK saw the release of the figures for Industrial Production

for the month of February. The data projected a contradictory view on the strength of the

UK’s economy to what was seen twenty four hours earlier. After growth in January was

revised to a lesser 0.3%, The Office for National Statistics announced that industrial

output fell by 1.2% in the following month. A measure of factory output, which

excludes oil/gas extraction and utilities, disappointed forecasts and followed in the footsteps

of January’s negative level. The impact of the news was almost immediately felt in the

market, especially for GBP/USD which dropped by 30 pips within minutes of the

announcement. This fall continued throughout the day, culminating in a half a cent

decrease in the session and bottoming out at $1.6265.

The data brought mixed opinions within the market, especially regarding the continuous

debate of inflation and its main method of control, interest rates. One side of the coin is

that the figures prove any rebound in economic output for the first quarter of 2011 is

weaker than initial hopes. In turn this would pour water on any rate hike talk that had been

inflamed by the surprise increase within the UK’s service sector.

“The fact that manufacturing output was flat means any rate hike expectations for

tomorrow or even May are most likely dead in the water,” said an economist at

Daiwa Capital Markets.

On the flip side, the news was received with some scepticism as economists highlighted the

volatility of the data. This view was backed up by the statistic that Britain’s Industrial Sector

is only responsible for 13% of the country’s GDP and so limiting its influence on policy making.

It was not only against the Greenback that GBP was pushed back from Tuesday’s gains.

EUR/GBP enjoyed a 0.6% rise on the day that added to the already recent surge in the

Single Currency. However, positive sentiment for Euro strength was not felt by all as

rumours surfaced that the ECB may not be as direct as first thought, with regards to future

interest rate decisions.

“The prime focus of the ECB meeting is going to be the press conference and whether or not

Trichet signals that the market is correct to price in two more rate hikes this year,” said a currency strategist at Rabobank.

IN THE UK

• UK Industrial Production figures show a fall (-1.2%) in February, casts further doubts over near-term rise in interest rates.
• Halifax report house prices in Britain rose by 0.1 % in March, but Halifax believe prices could fall by 2% by end of year.
• GBP/USD falls by 1 cent off the back of poor data. (Session low of $1.6265)
• The pound falls 0.6% against the euro as weak UK data bounces off more positive GDP data in Europe. 

ELSEWHERE

• Headline news - Portugal caretaker Prime Minister asks for bailout, markets had priced this in and it has made little difference.
• Australian unemployment falls to 4.9% and AUDUSD hits new all time high of 1.0482
• Euro trades slightly lower against USD after Portugal announcement, dropping from high of $1.4337 yesterday
• Focus remains firmly on ECB rate decision today, will comments afterwards point to more rises in near term future. Some are feeling the “ strong vigilance” stance may be dropped in favour of more flexible policy.
• Portugal bailout is unlikely to effect today’s decision as it was only a matter of time and would have been considered.
• Japan leave interest rates at 0.1%, reports suggest Japan are on the brink of financial collapse.
• News this morning all over the media name Spain as the next domino to fall.  

DATA TO LOOK OUT FOR

• 12.00 Bank of England Rate Decision, rates expected to remain on hold but minutes on 20^th will reveal voting patterns
• 12.45 ECB Rate Decision, depending on the rhetoric, the Euro may push on to stronger levels.
• US Initial Jobless Claims expected to fall slightly.
• Jean Claude Trichet’s speech at 12.30 will reveal outlook and ECB’s stance on future policy

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 hit its highest level in almost eight weeks against the euro yesterday after speculation that monetary policy in the euro zone would remain looser than in Britain.

Despite making gains against the euro, the pound fell against the US dollar which took broad gains against a basket of currencies as a slide in US shares suggested the markets were moving away from risky assets.

Analysts said weekly data showing a rise in bets against the euro suggested it would remain weak versus the pound. The Bank of England looks much less likely than the ECB to loosen monetary policy given a run of strong UK economic data.

The euro fell to its weakest level since late June, with the pound rising to a session high of €1.2275 after European Central Bank Governing Council member Axel Weber said late last week the ECB should extend its loose monetary stance.

The euro did make back some of its losses later in the afternoon after a lack of follow through selling later helped push the euro off its lows, traders said demand for the single currency around the €1.2270 level was met by offers around €1.2230, helping to keep the pair within a range.

Gains against the euro helped lift the pound to a fresh one-year high against a basket of currencies and its trade weighted index rose to 83.1 early on Monday, following a climb on Friday.

Technical analysts say the next level for the pound to reach is €1.2391, this is the June high and the highest the pound has reached since November 2008. If this level is broken the flood gates may well open with the pound potentially breaking the €1.25 mark.

Against the dollar the pound was slightly lower on the day at $1.5510, pulling away from a session peak of $1.5620.

The pound was sold off along with other perceived risky currencies as US shares fell. But it managed to stay above its 200-day moving average at $1.5476, and technical analysts said trend was likely to remain upwards as long as sterling continued to close above the 200-day average mark. For it to extend gains, however, it would need to sustain a move above $1.57, something it has struggled to do in recent days.

The euro traded fairly flat on the day against the dollar, it hit a session high $1.2725 at 9.00am in London and remained within 0.3% falling only as low as €1.2661 throughout the session.

Gerard Associates Ltd advises expats and people considering living abroad on the technical and currency options available for QROPS 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.