forward

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.

Friday saw yet more weak UK data after the British service sector reported its slowest growth since April 2009; the actual figure came in at 51.3 against expectations of 52.8 and lower then the last reported figure of 53.1.

Although the figure is still above 50 which shows growth overall, it does highlight concern the UK economy may slip back into recession and that the Bank of England may need to resort to further quantitative easing which has affected sterling negatively in the past. The survey also reported a fall in hiring new employees as companies seemed concerned how the public spending cuts and slowdown to the global recovery would affect business.

Sterling started the day making gains across the board against majority of its trading pairs but after the release sterling turned on its back foot as it raised continued concerns over the economic growth for the remainder of the year. These losses seemed fairly limited as the pound seemed to keep recovering before again retracing its forward steps.

Sterling hit an early session high of €1.2048 before retracing to hit the low of €1.1983 against the dollar sterling hit a day’s high of $1.5457 against the earlier low of $1.5391.

There was further bad news for the UK on Friday, with figures showing new construction orders tumbled 14% in the second quarter and dropped 9% on the year, their first decline in more than a year.

Retail sales were released in the euro zone which showed their month on month figure slightly down at 0.1% against the previous release of 0.2%, the year on year figure came in at 1.1% down from the previous release of 1.2% but certainly better than the expected figure of 0.6%.

In the US employment data was released with Nonfarm payrolls coming in better than expected for July at a revised figure of -54k against the previous figure of -131k. This is the third month in a row that jobs have been lost in the US. However the private sector created 67k jobs which exceeded expectations. The rate of unemployment now stands at 9.6% against the last release of 9.5% but many analysts feel that the high level of unemployment is undermining the US economic recovery. This was followed by non manufacturing index which fell to 51.5 down from 54.3 but yet still showing growth. Recent economic data has raised concerns about the strength of the US economy’s recovery and thus shining the spotlight of the global recovery.

Elsewhere the euro hit a two week high against the dollar reaching a day’s high of €1.2888 against the earlier low of €1.2809.

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 has risen to a 5-month high against the US dollar of $1.5663. Recent UK data supports this, although the housing sector has weakened somewhat.

The majority of UK data has been surprisingly upbeat, with in particular 2^nd quarter GDP and July CBI retail sales, the releases which have stood out.

However, we have seen weak housing data come out on Thursday, as UK mortgage approvals came in below expectations, following a softer Nationwide house survey. This didn’t have much effect on sterling, but analysts sounded cautious going forward.

It is hard at this stage to be optimistic about house prices in 2011 because the fiscal squeeze will increasingly kick in, which will hit people's pockets and could lead to serious job losses in the public sector.

Europe: the headline unemployment rate in Germany fell 0.1% to 7.6% in July. In a separate report, economic and industrial confidence improved by more than expected across the EU nations. This upbeat data follows a string of recent indicators which suggest the condition of the Eurozone has improved, especially as the euro has weakened, boosting their exports.

The euro has rebounded quite sharply against the US dollar, which is showing no signs of abating. However, this could count against the recovery of the weaker EU nations, like Greece and Portugal, who are already struggling to overcome their huge budget deficits.

Germany has been the “hero” so to speak, with their robust economy turning around the euro. Germany is heavily dependent on its export industry but if a higher euro starts to hurt German exports, we could see German growth begin to falter, which does not bode well for the rest of the region.

In the short-term, however, EUR/USD is being driven by a move away from the US dollar, as investors await US GDP figures, due to be released later today.

The latest jobless claims report showed improvement in the US labour market. Even though weekly jobless claims remains above the 450K level, the fact that it did not rise for a second week in a row, was a relief, albeit the amount of continuing claims rose by 1.8% to 4.565 million.

This is still a massive figure and it will be sometime before this turns positive on the US 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.