pence

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).

Sterling hovered near a two-month high against the euro on Tuesday on renewed worries

about Eurozone peripheral debt and risks of contagion, although it failed to gain much

traction despite better-than-expected UK construction activity data.

The euro fell as low as 86.99 pence (€1.1495), a level last struck on May 31, this was mainly

headed up by Italian bond yields hit their highest level in the euro’s 11-year lifetime,

ominously reaching the same level as Spain's in a sign that Rome is overtaking Madrid as the

main focus of investors' concern about debt sustainability.

Italy's stock index fell to its lowest in more than 27 months, dragged down by banks with a

heavy exposure to Italian debt. European shares hit a 9-month low amid worries that

slowing economic growth will make it even harder to overcome the Euro zone's debt

troubles.

Sterling traded to a low of $1.6223 versus the dollar, mainly due to further news being

released from across the pond regarding their debt ceiling meetings. Some traders have said

sterling could find support from the news Hong Kong's CKI has agreed to buy Northumbrian

Water Group in what could be the biggest takeover this year of a British-listed company.

UK construction PMI data for July beat expectations with a reading of 53.5 of which showed

that the sector is in expansion, compared to a forecast of 53.0, but the positive impact on

sterling was limited as construction makes up less than 10% of the economy.

The outlook for the UK is still lacklustre after data on Monday showed the manufacturing

PMI shrank for the first time in two years, pushing sterling down from a two-month high of

$1.6477.

"The data has held up better than people expected but the fixation is on manufacturing

data and the services data tomorrow. The market seems to be focusing on UK growth being

softer," said a FX strategist at Credit Agricole. "Against the Euro, sterling is

going a bit better but it's approaching its 200-day moving average at 86.63 and last time we

bounced just above that."

Across the pond there was no major impact data being released, other than consistent

feedback regarding meetings concerning the US debt ceiling. However the medium and low

impact data that was released all missed expectations. It would seem that the market will be

looking towards the next few days where we have a host of high impact data being released

from the US, Eurozone and the UK.

IN THE UK

• Sterling posted a near 2 month high against the euro at the rate of €1.1495.
• Sterling retreated further against the US Dollar, posting a low of $1.6223.
• Sterling’s Construction PMI data beats expectations posting a figure of 53.5 against a figure of 53 showing the sector is in expansion.
• Outlook for Sterling is still poor based on Monday’s Manufacturing data that was released, and massively missing expectations posting 2 yearly lows.
• The pound receives a welcome lift as PMI Services, the most important of the PMI’s, is released this morning well above expectations at 55.4.  

ELSEWHERE

• Euro Price Producers Index month on month narrowly misses expectations posting a figure of 0% against a forecast figure of 0.1%.
• US Core PCE Price Index month on month misses expectations posting a figure of 0.1% against a forecast figure of 0.2%.
• US Personal spending month on month massively misses expectations posting a figure of -0.2% against a forecasted posted figure of 0.2%.
• Swiss Retail Sales year on year posts a vastly better than expected figure of 7.4% against forecasted figures of 1.6%.
• The US have been put on negative outlook by Moody’s although maintain their AAA rating, however S&P say there is a 50% chance they will lose top tier rating.
• Prospects for the Eurozone and the US look equally bad as poor reports regarding Spain and Italy filter around the markets, the US despite having the debt limit raised is not out of the woods, poor GDP and ISM Manufacturing figures compound this and prompt investors to remain on a risk off strategy.

DATA TO LOOK OUT FOR

• BRC Shop Price Index year on year expected to beat previous years reading of 2.9%.
• Australian Retail Sales month on month forecast to post a figure of 0.4%.
• Euro Services PMI expected at 51.4.
• US ADP Non-Farm Employment Change expected to post a figure of 101k ahead of the Non-Farm Payroll figures on Friday this week.
• New Zealand Unemployment Rate expected to be released tomorrow at a forecasted figure of 6.5%.

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).

Sterling rebounded against the dollar on Friday, after much weaker than forecast US jobs data

drove investors who had added bullish bets on the greenback in expectation of a strong number

to unwind those positions.

Sterling rose to a session high of $1.6078 reversing earlier losses, with investors now targeting

the July 6 high of $1.6090. The short covering also helped the pound advance against the euro,

with the common currency last down 1% at €1.1243 .

U.S. data showed employment growth ground to a halt in June, with employers hiring the fewest

number of workers in nine months, dashing expectations the economy would regain momentum

in the second half of the year.

Analysts expect investors to sell into sterling's latest rally, although near-term support remained

robust around Friday's low of $1.5930 with traders citing bids from Asian central banks and

corporate buyers.

Earlier, the pound barely reacted to data showing Britain's construction industry struggling to

grow in May and an unexpectedly strong rise in UK factory gate inflation, which climbed to its

highest level since October 2008.

The weak data along with the high prices did little to shake the market view that the Bank of

England is committed to loose monetary policy and unlikely to raise interest rates before next

summer.

In the U.S., short-term interest rate futures traders are betting the Federal Reserve will stay on

hold well into 2012 after the June jobs report. Traders, who had thought the Fed would likely

begin raising rates by the July 2012 meeting, slashed those bets and they now see just a 36% chance of a such a hike.

EURO WHIPPY BEFORE STRESS TESTS

While the dollar sold off broadly after the jobs numbers, the euro failed to get much of a lift. The

euro was down 0.3% against the dollar at $1.4320 , with investors wary about the single

currency amid lingering concerns about debt contagion.

Traders said against the pound, the euro has support around 88.595 pence -- the low hit on June

27 -- and then around 88.50 pence, the 50% retracement of the euro's rise from a low of

86.11 pence on May 26 to its 15-month high of 90.84 on July 1.

Earlier, the euro had come under pressure on a European Union draft report outlining measures

to deal with weak banks and the suspension of trade in shares of Unicredit.

The single currency then bounced back, with traders citing a Reuters report saying all five Italian

banks covered in EU stress tests had passed.

Overall, Schmidt at Lloyds said investors will be wary of adding euros to their portfolios ahead of

the results of EU-wide bank stress tests next week.

The euro had risen to a 15-month high against the pound earlier this month as a result of the

single currency's favourable interest rate differentials.

On Thursday, the European Central Bank hiked base rates to 1.5% and markets have

priced in another rise this year, although some analysts expect it to take a pause

IN THE UK

• The pound had little response on Friday to a rise in Producer Output prices on Friday as investors felt the information was not enough to warrant a shift in interest rate speculation.
• However, after lunch GBP/USD spiked almost a cent to 1.6073 as disappointing employment data in the US causes a USD selloff
• The pound rises this morning to a high of 1.1299 against a slightly weaker euro as debt worries remain in the news.

ELSEWHERE

• Friday’s much anticipated US employment figure are significantly worse than expected, some experts were hoping for a figure over 100k, the posted figure was 18k the lowest rise since September 2010.
• Unemployment rate in the US follows week Non Farm Payrolls data and rises to 9.2%.
• EURUSD falls to a low of 1.4138 after reports suggest that the debt problems are going to hit Italy. Europe’s 3^rd largest economy would require the EU bailout fund to be doubled to 1.5 trillion euros if intervention was needed.
• Markets are now beginning to think the euro is a dangerous bet, many have felt that it has been overpriced recently and despite all negative press never seems to go down. Whilst EUR/USD and GBP/EUR would appear to support this comment EUR/CHF, EUR/JPY and EUR/NZD all within 20 pips of multi-year lows.
• AUD suffers slightly as Chinese inflation is slightly higher than expected and China says they will be watching monetary policy closely.
• The US debt talks will continue today, no progress has been made and there are just 3 weeks to go before deadline of 2^nd August to reach a resolution.

DATA TO LOOK OUT FOR

• Quiet day of data today includes Norwegian CPI figures
• Canadian House Starts at 1.15pm followed by Bank of Canada Business Outlook Survey for Q2.
• EU Finance ministers meet today to discuss amongst other things Italy and to prepare to accept Greece’s should default on some of its bonds.
• President Obama continues debt talks with members of congress and treasury.
• Overnight tonight in the UK RICS release the Housing Price Balance, the figure is expected to show a slight improvement in housing market condition and move up from -28 to -25.

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 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, a QROPS and now QNUPS (Qualifying non UK Pension schemes).

Sterling fell broadly on Tuesday against the majority of currencies, mainly based on the back

of Bank of England policy makers keeping the option of further QE firmly open if the UK

continues to display poor data readings concerning first quarter growth.

Sterling hit a five month low against the US Dollar posting lows of $1.5912 before running

into reported demand from sovereign names ahead of an options barrier at $1.5900. It also

hit a near three week low against the Euro posting a low of €1.1132, which opened the way

to a key technical level of €1.1111 (90p). Sterling also hit record lows against the safe haven

currency Swiss franc.

The highly anticipated final reading of the UK GDP figure came in-line with expectations at

0.5% for the first quarter, while the annual growth figure was revised down from 1.8% to

1.6%.

"The downward revision to year-on-year GDP was at the margin another reminder that the

UK economic and financial performance remains deeply worrying," said a currency strategist at FXPro. "It could very easily be argued that the UK needs an even weaker currency," they added.

This data adds to the view that the UK interest rates will be kept on hold at record lows for

the majority of this year, even running the possibility of them remaining at 0.5% into 2012.

The UK also had further disappointing data in the form of our current account reading

posting a figure of -9.4BN against a forecast figure -5.0BN. The reason why this data is

important is because it's directly linked to currency demand - a rising surplus indicates that

foreigners are buying more of the domestic currency to execute transactions in the country.

The Euro was dominated by the Greece debt story further more as the Euro posted a high

against the US Dollar at €1.4397 in the morning. However further gains look limited against

the dollar, ahead of the Greece parliament vote on austerity measures needed to avert the

Euro zone’s first default.

The Euro played host to a slight boost due to a slight increase in investor confidence on the

posting of positive US house data prices and comments from the ECB head Jean-Claude

Trichet that policy makers were in “strong vigilance” mode on inflation. Trichet’s use of key

word “strong vigilance” shows that a further interest rate hike in July could be on the cards.

Across the pond data was fairly light with only one high impact piece being released in the

form of their CB Consumer Confidence figure at 2.43pm. The figure disappointed estimates

posting a figure of 58.5 against an expected figure of 60.8.

IN THE UK

• Sterling fell against a basket of currencies for the majority of Tuesday’s trading session hitting 5 month lows at $1.5909 and lows of €1.1132 against the euro.
• Final reading of first quarter GDP is kept in line with expectations at 0.5%.
• UK’s current account data misses expectations for the 8th consecutive month running.
• Bank of England’s King says more QE is a possibility but not if it would drive inflation higher, colleague Tucker, disagrees with QE but is firmly in the ‘no change to interest rates’ camp
• This morning UK Mortgage approvals come in slightly lower than expected at 45.94k but the figure shows an improvement from last month’s 45.166k

ELSEWHERE

• GfK German Consumer Climate beat expectations posting a figure of 5.7 against a figure of 5.4.
• Greece debt story remains centre of the headlines, ahead of their parliament vote for austerity measures.
• US consumer confidence misses expectations of 60.8, posting a figure of 58.5.
• US Richmond manufacturing index beats expectations posting a figure of 3 against a forecasted 2.
• In yesterday’s conference Trichet confirms ECB ‘strong vigilance’ stance saying April rate rise will not stand by itself
• Wall Street Journal publishes article that Portugal are to accelerate austerity measures as previous programme not enough.
• Euro strong this morning ahead of Greece vote, GBPEUR falls below 1.11 and EURUSD breaks 1.44

DATA TO LOOK OUT FOR

• Headline data today is the Greek Austerity Vote, all other releases today will be overshadowed by results of the voting and how those results are interpreted. A failed vote could lead to significant euro selling whilst a passed vote could see a slight euro rally. The results are expected between 3 and 6pm
• Eurozone Consumer Confidence is released at 10.00am, the figure is expected to fall slightly to -10 from -9.9
• Swiss KOF Leading Indicators are published at 10.30, also expected to fall to 2.23
• Canadian Consumer Price Index inflation figures expected to be released at 12pm and to post the figure of 0.3%.
• US Pending Home Sales month on month expected at 2.4% and to be released at 3pm.

Gerard Associates Ltd advises expats and people considering living abroad on the technical and currency options available for Pensions, pension income drawdown, 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.