forward , particularly against the US Dollar

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 Friday hitting it’s lowest level since June 1st as rising European money market rates and higher equities increased demand for the European single currency.

Positive data from the US (corporate earnings) mixed in with some poor US data has helped to increase risk appetite and this has driven the euro forward, particularly against the US Dollar.

The pounds losses against the euro helped to pull the euro away from a two and a half month high against the US dollar hit on Thursday, however the euro has continued to gain over the weekend hitting a high of $1.2941 early this morning.

Analysts said sterling's slide versus the dollar, which clips a three-day winning streak, suggested that investors are taking a breather from the pound's rise since mid-May as speculators unwind extreme short positions in the currency.

In the past few weeks confidence in the US dollar which is seen as a safe haven has waned, coupled with an increase in confidence and therefore risk appetite sterling has done particularly well. Analysts and investors said that seasonal liquidity in the markets was helping to exaggerate sterling’s moves and was leaving the pound a little stretched.

By mid afternoon on Friday sterling had lost 0.8% against the euro and was trading at €1.1852 having retraced losses of 0.2% from €1.1823.

The bank to bank lending rates mentioned earlier were cited as the reason for the Euros strong performance.

Against the US dollar sterling fell 0.7% to $1.5344 dropping off a high of $1.5473 hit briefly on Thursday its strongest since April.

Sterling has benefitted in the last week from data showing a significant fall in the number of people claiming UK unemployment benefit in June, which has raised optimism that an improving labour market will support the economy's recovery.

This contrasted with a series of sluggish US economic reports, including a drop in wholesale prices in June and a slowdown in manufacturing announced on Thursday. This poor US data has raised concerns that the US recovery may be slackening.

Analysts said sterling would more than likely extend near-term gains on expectations the

UK economy would ultimately benefit from tough spending cuts planned by the new coalition government, while negative dollar sentiment may provide an additional boost.

This week The US Federal Reserve chairman’s testimony to Congress, in which he is expected to air his concerns over the strength of the US recovery, is likely to dominate the week’s economic announcements

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.