Natural Disaster

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).

Tuesday saw sterling fall to its lowest level in 13 months against the dollar and came under

attack against the euro, after the release of weak UK construction data added further

speculation that the Bank of England may be pushed further towards more quantitative

easing.

The pound also came under pressure along with other riskier assets and higher yielding

currencies as increasing problems with growth funding weighed down on the banking sector

with some European banks under intense selling pressure due to the exposure to the Greek

debt crisis.

The UK Construction headline activity index fell sharply to 50.1 in September from 52.6 in

August, its lowest reading in 10 months and weaker than forecasts of a 51.5 drop. Sterling

hit a low of 1.5339 against the ever buoyant dollar, not far from its recent low of 1.5326

which was its lowest level since early September 2010.

“A break below the 1.5320/25 level should see some more sell-stops being triggered

dragging it lower” said a forex trader at ETX capital. “Sterling is looking

very heavy going into the Bank of England decision on Thursday”

Earlier in the morning some traders were saying there was an interest in buying sterling at

the 1.5400/10 from Eastern European names and Sian sovereigns. Sentiment towards

sterling has taken a down turn in recent weeks on expectations more QE may be needed to

revive the flagging economy. Another round would flood the market with the UK currency,

reducing its demand.

Late in afternoon trading we saw the Euro strengthen across the board as Federal Reserve

Chairman Ben Bernanke warned of continued strain on the U.S economy and noted the

negative impact of elevated volatility and risk aversion in the financial market during

testimony before a joint committee of Congress. As a result of these comments we saw

GBP/EUR fall to hit a low of 1.1575, and EUR/USD rally 1.33.

IN THE UK

• GBP/USD falls to a near 13 month low, hitting a low of 1.5339 but recovers in the afternoon trading above the $1.5400 level
• UK Construction PMI falls sharply to 50.1 in September much lower than the 51.5 drop forecasted and disappoints the markets after Monday’s surprise rise in Manufacturing.
• After the release of weak UK construction data, renewed speculation of further QE, causes sterling to fall across the board
• GBP/EUR moves from 1.1717 hit overnight to fall a low of 1.1565.
• UK PMI Services just released shows another surprise rise, 52.9 instead of the expected fall to 50.7, sterling moves up off session lows to $1.5447 and €1.1617
• Final print of UK Q2 GDP reports an downwards revision to 0.1% from the previously released 0.2%

ELSEWHERE

• USD falls across the board after Fed Chairman Ben Bernanke’s speech last night, he warns congress of more sluggish jobs data ahead, causing EUR/USD to hit 1.33
• US factory orders dip 0.2% in August
• Eurozone producer prices fall 0.1% in August
• EUR/CHF spikes above 1.22, its highest level in almost 2 weeks, there is talk circulating that the SNB may raise the EURCHF lower limit to 1.3000
• Italy downgraded by Moody’s by 3 notches, follows S+P’s downgrade last month, this has little effect on euro strength.
• European Finance Minister says that Eurozone nations intend to support their banks as current events show the danger of banking sector troubles escalating. Belgium Prime Minister says that investors and savers need not to worry as no one will lose a single cent over the Dexia problems.

DATA TO LOOK OUT FOR (all times UK BST)

• Eurozone GDP is released at 10.00am, the previous release was 2.5%
• Also at 10.00am Eurozone retail sales are released, expected to fall in August to -0.2%
• At 1.15pm ADP Employment Change is released in the US, will provide investors with a idea of what Friday’s more important Nonfarm Payrolls might be look like. A fall to 75k is expected from 91k last month.
• 3.00pm ISM Non Manufacturing figures are released.

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).

A difficult week last week for sterling culminated in sterling continuing to lose ground across

the board on Friday. Sterling fell to a session low against the dollar following Fed chairman

Ben Bernanke speaking publicly at the Jackson Hole press conference. Bernanke offered no

news on fresh stimulus to stimulate the US economy and this led to dollar strength due to its

safe haven status.

The markets had been anticipating Bernanke’s speech all week hoping that he might make

specific reference to further monetary easing but they were disappointed. In actual fact

Bernanke said that the Fed had tools available to them but gave no indication when or if

they would decide to use them.

In the UK the ‘drip drip’ of poor data we had seen all week last week showed no sign of

abating following the release of UK growth in the second quarter. The 0.2% reading was

bang on consensus and offered no support to the ailing pound. Sterling was down around

0.3% for the day on Friday at a session low of $1.6236, falling from around $1.6300

before Bernanke's speech. Technical analysts highlighted support from sterling's 55-day

moving average at $1.6224.

Against the euro it was a very similar story, the poor UK data put pay to the recent sterling

strength with GBP/EUR falling significantly during the week, closing on Friday at €1.1275

having started on the plus side of €1.1450. Even without the poor data the pound has also

been hampered by the market's view that UK interest rates are likely to be kept on hold

through 2012, with some thinking more quantitative easing may be needed to support the

British economy.

Bank of England policymaker Martin Weale told a regional newspaper on Friday he does not

see any need for quantitative easing at the moment, but does not rule it out, and would

engage in further stimulus if the economy worsened substantially.

IN THE UK

• Sterling loses ground across the board on Friday
• The GBP/EUR falls to €1.1260, the lowest level seen since August 10th.
• The UK’s 2nd release of Q2 GDP figures was confirmed at 0.2%, overall matching consensus but with a slight downward revision to production industries offset by marginally stronger service sector growth.
• The data did little to change investors overall view of the UK economy and the pound remains under pressure.
• A slight relief to the pound this morning came in the form of Mortgage Approvals for July, the figure rose to 49.23k, above the consensus of 49k

ELSEWHERE

• Initially on Friday the US dollar gained against sterling but later reverses gains moving from the low of $1.6207 to end trade near $1.6345.
• US personal spending increases to 0.8% in July.
• Relief that the damage inflicted by the recent hurricane on the US east coast was less serve then first expected, this provides a major boost for risk assets.
• The Dow Jones rises 255 points to close at 11,539.
• In the Eurozone Greece’s biggest banks Eurobank EFG and Alpha Bank have announced they are to merge, this is positive news for struggling Greece as the government have encourage banks to pool resources to help deal with the current debt crisis.

DATA TO LOOK OUT FOR

• At 3.00pm this afternoon Consumer Confidence figures in the US are released. The markets are expecting a dramatic fall to 52.2 from 59.5 as the struggling US economy begins to hit the consumer.
• Minutes from the Fed’s August 9^th interest rate decision meeting are released.
• Overnight Gfk Consumer Confidence figures in the UK are released, the figure is expected to remain around the -30 mark.

 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).

Yesterday saw the release of UK GDP which as expected confirmed Britain’s economy grew

by just 0.2% in the last quarter, slower than in the first three months of 2011. Although GDP

expanded by just 0.2%, the office for National Statistics estimated that if it was not for the

special factors such as the royal wedding, Olympic ticket sales and the Japanese tsunami,

growth could have been as high as 0.7%.

“This sets the stage for a potential solid third quarter GDP report” a European

economist at Credit Suisse, said.

This helped the pound jump to a six week high against a broadly weaker dollar to $1.6420 in

early trading as investors were bracing themselves for a weaker figure. Sterling’s gains were

aided by a slump in the US dollar as US lawmakers remained in deadlock in talks over raising

the debt ceiling only a week before deadline to act.

The ONS’s first estimate of GDP is made up with 40% of the final data and may be revised in

the next two months, but it was published in line with consensus. Several economists had

expected the economy to contract, due largely to the weak state of household finances.

George Osborne and Vince Cable use the figures to reiterate that the Government would not

be deflected from its £110bn austerely programme.

“The positive news is that the British economy is continuing to grow and is creating jobs,”

the Chancellor said. “Our economy is stable at this time because this Government has taken

the difficult decisions to get to grips with Britain’s debts. Abandoning that now, as some

argue we should, would only risk British jobs and growth.”

Across the pond we saw a number of important releases that showed consumer confidence

unexpectedly improve in July, New home sales fell in June and existing home sales were flat

in May. The unexpected improvement in consumer confidence in July was concentrated in

an improvement in the “expectations” component. The increase in consumer confidence in

July marks a break from the near-term downward trend that has been evident since the

sentiment gauge hit a three year high of 72.0 in February. In a separate release the pace of

new homes sales slipped 1% to 312,000 in June following a 0.6% decline to a downwardly

revised 315,000 level in May.

IN THE UK

• UK GDP comes in line with consensus at 0.2% helping sterling climb against a basket of currencies as the majority of market participants had expected a flat or even negative result.
• Sterling climbs to 1.6420 a six week high against a broadly weaker dollar.
• Many expects think if the Royal Wedding and Tsunami did not happen GDP could have hit 0.7%, all eyes will now be on the third quarter reading.
• Sterling recovered losses made against the euro in late Monday trading to hit a high of 1.1340.

ELSEWHERE

• US Dollar is still being hurt as US lawmakers remain in a deadlock in talks over raising the debt ceiling. There are now only 6 days left to reach an agreement before all the money runs out and the US heads towards default.  
• Spain, Italy debt sales show Eurozone relief fading.
• US consumer confidence unexpectedly improves in July but New homes sales add to the dollar woes showing a fall in June
• The Australian Dollar rises in Asian trading this morning as CPI figures are released higher than expected, prompting the markets to expect another interest rate rise by Q4 at the latest. GBP/AUD drops into the 1.48’s.
• Japan’s economic worries continue as IMF’s Lagarde suggested they will need financial intervention to tackle economic crisis after the tsunami.

DATA TO LOOK OUT FOR

• UK CBI Industrial Trends Survey expected to come in at -3%, the results tend not to have much impact on sterling strength but could help it if the published figure is higher than expected.
• MPC member David Miles speaks, any negative tone towards sterling will send it crashing
• US Durable goods orders out at 1.30pm, this measures the cost of orders received by manufactures for durable goods and is expected to fall sharply to 0.4%
• This evening at 7.00pm US beige book figures are released, this reports on the current US economic situation and will highlight the weak sectors.

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.