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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.

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 fell against the euro on Thursday and lost gains made against the US dollar after UK PMI Manufacturing fell to 54.3 in August, below the forecasts of a downwardly revised 56.9 in July. This was the lowest level since November last year although it was still above the 50 mark that separates growth from contraction.

Britain's manufacturing sector has been expanding nicely for over a year but slowed steadily over the past four months. The PMI's new orders index, a leading indicator of activity growth, fell particularly sharply to 52 in August from 58.5 in July. That was its lowest level since June 2009 and its biggest one-month fall in more than six years.

These figures back up the view being batted around the city that Britain’s economy is starting to slow after strong growth in the second quarter. They will also support the view that UK interest rates will remain at the low of 0.5% for quite some time.

Swiss Bank UBS also warned that spending cuts and tax rises outlined by George Osborne will also dampen UK growth and told clients to sell the pound. Sterling fell on the back of this to a fresh three week low of €1.2004 against the euro, also dropping to a $1.5491 versus the US dollar.

The UK economy grew by 1.2% in the second quarter which surprised most, however general consensus was this pace will not last. This is due to large public spending cuts and continued risk aversion in global financial markets.

Elsewhere across the pond US ISM manufacturing unexpectedly rose in August, growing for a thirteenth month to 56.30 from 55.5 in July. It’s worth noting that a reading of above 50 indicates the sector is expanding. This beat market expectations that the index would decline to 52.8.

Today's ISM manufacturing report suggests that the goods-producing side of the US economy continues to expand in the third quarter of 2010 and that the pace of growth is not fading as previously expected, suggesting that the sector will continue to provide support to the economy.

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 fell against the US dollar on Friday hitting a new day’s low after a pledge by

Federal Reserve Chairman Ben Bernanke to provide more monetary stimulus if necessary boosted the dollar.

Also better than expected UK growth figures were largely ignored on Friday as investors unwound risky positions with the long weekend in the UK looming.

Bernanke said the U.S. economic recovery was stuttering more than expected and that the central bank was prepared to provide additional stimulus, including buying more longer-term securities, if needed at the central bank's annual retreat in Jackson Hole, Wyoming.

Immediately following Bernanke’s comments sterling fell against the US dollar to $1.5442 but recovered slightly in late afternoon trade to $1.5515 still down on the day.

The UK GDP data on Friday showed the economy grew 1.25 on the quarter and 1.7% on the year, stronger than expectations for 1.1% and 1.6% respectively.

Yesterday trading was very thin due to the UK holiday, nevertheless cable traded towards the top end of last weeks range. Despite the holiday there was data on the domestic front.

The latest housing data from Hometrack recorded the second consecutive monthly decline in prices, with the Year on year rate falling down 1.5%.

In addition the British Chambers of Commerce, in their latest forecasts, see interest rates on hold until the second quarter of next year, despite their upward revision to growth in the current quarter.

Key data this week to look out for will be the US fed minutes later on this afternoon, German PMI tomorrow morning followed swiftly by Eurozone PMI.

Thursday sees Swiss GDP followed later in the morning by Eurozone GDP and an ECB rate decision.

Friday sees the well documented US non-farm payroll figures.

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.