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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).

IN THE UK

• Sterling fell below the critical 1.5850 support level against the dollar, reaching a low of 1.5798 as the UK inflation slowed more than expected giving the Bank of England reason to continue their dovish stance on monetary policy.
• Bank of England governor Mervyn King remains insistent that inflation will drop aggressively, the CPI reading of 5% is still well beyond the government’s 2% target, as it has been for the previous 22 months, leading the governor to write yet another inflation letter to George Osborne explaining why Inflation is still above target.
• The pound remains under pressure this morning as figures show the Employment Rate in the UK has risen to 8.3% above the consensus. Reports earlier in the month suggest that business leaders feel unemployment figures are likely to get worse before they start to improve.

ELSEWHERE

• EU president Herman van Rompuy yesterday urged Eurozone governments ‘to do more’ in ordering their own houses, asserting that the euro-area has the ‘means’ to escape the current crisis.
• Positive sentiment from a new Italian government has worn off. Perhaps a smooth government handover could have invigorated investor confidence, for the moment Mario Monti seems to be working against a gradient.
• Italian and Spanish bond yields continue to suffer with the Italy’s 10 year return once again surpassing the ominous 7% threshold, where the cost of borrowing essentially increases faster than a region can sustain repayments.
• Q3 GDP data from Europe served to divide market sentiment as France and Germany appear to have staved off the dreaded contagion, for now at least, with respective growth of 0.4% and 0.5% but the figures leave France desperately short of their growth target for 2011.
• The aggregate decline in Eurozone confidence saw EUR/USD close the European session over a cent down from the same time on Monday at $1.3623.
• Market rumours have emerged suggesting that the ECB intervened in the bond market to purchase Italian debt and the governing council may have little option but to expand its monetary policy as the region braces for a ‘mild recession.’
• Credit Suisse data shows the markets believe there is a 62% chance of a further 25bps cut interest rates from the ECB in December. Speculation on future policy could subsequently weigh on the exchange rate as investors consider the impact of future policy.
• Risk aversion played a strong role in Tuesday’s trading but a rally for equities suggested a sharp turn in sentiment for the second half of the day after the dollar was boosted by a tranche of positive data from the states, including better than expected data retail sales. The dollar carried an advance until this morning when risk aversion seemed to resurface.

DATA TO LOOK OUT FOR (all times GMT)

• In the UK this morning at 10.30am the Bank of England releases the Quarterly Inflation Report  The consensus seems to be that King will maintain the central bank’s dovish tone regarding monetary policy and the outlook for growth will be considerably weaker
• Main data today in the US is release of Consumer Price Index at 1.30pm; this will provide information on US inflation and give the markets a heads up on future US monetary policy.
• US Industrial Production is published at 2.15pm with some predictions expecting a solid 0.4% growth given complications in Japanese led supply-disruptions spurring an increase in US output 

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.

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 or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension, 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, QROPS and now QNUPS (Qualifying non UK Pension schemes).

UK fiscal numbers for May were pretty close to expectations, yesterday. The

government’s favoured measure, public sector net borrowing excluding financial

interventions, came in at £17.4billion, down from £18.27billion for the same period

last year. The cumulative for the first 2 months of the fiscal year stands at

£27.4billion versus £25.9billion for last year, which reflects the fact that last year was

boosted by the one-off bank payroll tax, that raised around £3.5billion.

Strip this effect out and there is an underlying improvement in the fiscal position,

with VAT and corporation tax revenues, up healthily. Interest payments continue to

rise, which is largely driven by the fact that 20% of UK government debt is inflation linked

and inflation is rising sharply. Net departmental outlays are down 1.0% year

on year, so there is only tentative signs of spending cuts coming through right now.

Although we are experiencing weak economic activity, we expect to see further

improvements in the UK’s fiscal position in coming months, although we also expect

the progress to be rather slow.

In a separate development, sterling dropped to session lows after one of the

policymakers for the Bank of England, Paul Fisher, struck a more dovish tone and

kept alive the chances of more Quantative Easing (QE). He said that if the Bank of England’s policymakers

saw mid-term inflation turning into deflation, they may have to consider more QE

and added QE was very much “on the table” as a policy option.

Over in Europe, Germany’s Zew Economic indicator came out at -9.0, much lower

than the expected -1.5. The outcome indicated a drop of 12.1 points compared to

the May value of 3.1. The current reading is well below the indicator’s average value

of 26.3 points. The decline spurred pessimism in the markets and especially across

the single currency community. This figure dictates that there is great possibility for

the German economy to slowdown in the coming months. Germany seems to have

been affected by the financing problems in the heavily indebted peripheral

economies and a series of negative economic data for the US economy, from which

Germany relies much of its exports on.

Over in the United States, US existing home sales dipped slightly, less than expected

in May, as temporary factors and financing problems weighed on the market. In a

report, the National Association of Realtors said that existing homes sales declined

by 3.8% to a seasonally adjusted 4.81million units in May from 5.05million. Analysts

had expected existing home sales to decline 4.4% to a seasonally adjusted

4.78million units in May. An economist for NAR, said “Spiking

gasoline prices along with widespread severe weather hurt house shopping in April,

leading to soft figures for actual closings in May.” They added, “Current housing

market activity indicates a very slow pace of broader economic activity, but recent

reversals in oil prices are likely to mitigate the impact going forward.”

IN THE UK

• UK Public sector net borrowing rises less than expected, totaling £17.4 billion in May
• Sterling drops after BoE policymaker, Paul Fisher flags chance of more QE after Public Finance data painted a dismal picture of the UK’s fiscal position
• GBP hits a low on the back of these comments to a low of $1.6166 and €1.1264 on the day

ELSEWHERE

• German ZEW drops to -9.0, missing poll expectations of -1.5, indicating the potential of a slowdown of their economy in the following months
• Canada core retail sales unexpectedly flat in April after declining by 0.2% in March. Expectations were for a rise to 0.6% in April but was adjusted to only 0.3%.
• US Existing homes sales fell less than expected in May and prices dropped 4.6 percent from a year ago.
• Last night the Greek PM won the vote of confidence, it was expected but does provide relief and helped the euro break through 1.44 against the US dollar
• June 30^th is the date for the formal vote on fiscal strategy, if this goes to plan it means the latest tranche of aid will be paid in July
• Italy is under pressure now, potential downgrade and government facing confidence votes.
• No change is expected at the Norges bank interest rate decision meeting

DATA TO LOOK OUT FOR

• All eyes are on this morning’s Bank of England minutes release, due out 9.30am. Will sterling weaken on the back of this after mentioning that potential QE is ‘on the table’?
• 10.00am we have the Swiss ZEW Survey expectations for June
• 10.00am we also have out the Eurozone Industrial New Orders (Year on Year) for April
• Eurozone Consumer Confidence for June due out at 3.00pm
• 5.30pm US interest rate decision, it’s very unlikely to change from their current rate of 0.25%.
• ECB President Trichet and Bank of England’s Governor King, both speak at the European Sytemic Risk Board Press Conference at 5.30pm
• Ben Bernanke speaks at the Fed Press Conference at 7.15pm. Interesting to see what happens with the dollar and what comments are made about the interest rate decision, the end of QE2 and potential QE3

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 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.