Managing Director

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).

Thursday saw a balanced day in terms of economic data from the UK.

Japan has slipped into a qualified recession. Japan’s industrial production, one of any

economy’s key indicators, returned a disappointing negative revision down of 15.5%, 0.4%

below the forecast 115.1. Sterling and euro saw improvements against the Yen with pound

improving nearly ½% over the course of London trading reaching a high of 132.96.

Whilst the full effects of their developing nuclear concern, and indeed the Tsunami from

which it stemmed, are difficult to gauge even now, it would seem that instability is driving

investors further towards more transparent profit taking opportunities.

The resignation of the IMF Managing director has interestingly placed the pound, and a

basket of other currencies, on the losing side of euro trading. The pound found itself as low

as 1.1309 over the course of the European session. Dominic Strauss-Kahn’s stepping down

brings something of a delay to the answering of questions over debt restructuring strategies

for Greece; and with the Finish objections all but completely subverted, Strauss-Kahn’s

charges have served to dissipate fears over this key European concern, for the moment

anyway. Putting the debt restructuring figuratively ‘on the back burner’ has led traders to

return to more risk sensitive currencies, and with oil returning to $100 per barrel, the euro

finds itself further bolstered in the immediate term as characterised by a 1.4205 high 1.4306

movement against the dollar.

UK retail sales figures received a much needed booster during April. The hottest spring on

record has served to draw consumers onto the high street, with figures of a 1.1% increase

surpassing the 0.9% forecast. Whilst acknowledging an improvement in retail sales for last

month, scorching temperatures are likely to have a significantly detrimental effect on UK

and European wheat production, which may further fuel the increase in the pace of inflation

in Britain as we approach summer.

Pundits and analysts fears the UK manufacturing was not growing at satisfactory pace, but

the CBI (Confederation of British Industries) was no doubt relieved to confirm that the total

manufacturing index related figures showed better output relative to the forecast. It seems

that the potential for ‘solid’ improvements in the sector over the coming quarter. This

foundation for further manufacturing gains is not supported by consumer confidence within

the UK. Nationwide’s CCI showing that confidence in the UK is in fact approaching the

record lows last seen when Britain was in outright recession.

Friday morning reveals further data concerning the world third largest economy as Japan

delivers her Monetary Policy Statement and a review of her overnight deposit rate. The Bank of Japan will also present their position at their monthly press conference, scheduled between

7.00am to 9.00am 

IN THE UK 

• UK Retails Sales month on month reveal improvement in high street spending; data returned 1.1% against 0.3% for March and confounding 0.9% seasonal forecasts.
• Sterling finds resting point between €1.1309 low and €1.1371 high following further speculation as to developments in the handling of Greek repayment structure.
• CBI suggest manufacturing sector may continue to show continued growth over the coming quarter; analysts do warn that the Industrial Order Expectations index is a volatile gauge of the sectors activity, and should not form the basis of a rounded appraisal.
• GBP remains consistently below $1.62 level for the duration of the UK and European sessions, despite uninspiring, if not disappointing, economic information from the States.
• MPC member Bean is skeptical as to whether improvement in retails sales signifies any return in consumer confidence, but did support a hold on rates given the fragility of UK growth expectations.
• UK Telegraph report George Soros has sold 99%of his gold stock rumoured to be worth nearly $800 million.

ELSEWHERE 

• Euro strengthens to maintain stable range against USD despite oil returning to $100 a barrel.
• Yen fights back against EUR pressure having seen the single currency push to 117.23 during the session.  The Session closed with EURJPY holding at 116.46 despite confirmation of Japanese recession
• US releases positive Unemployment claims figures.  409k claims versus 421k forecasts, even in the face of a drop in the number of owned properties being bought and sold for April.  The Latter figure showing that 5.05M traded, against an expected 5.21M
• Swiss ZEW Economic Expectations return a far gloomier assessment of growth, prompting sterling to move higher with a 0.22% improvement.  GBPCHF breached 1.4356 during the European session.

DATA TO LOOK OUT FOR 

• BOJ Press Conference, coupled with Monetary Policy Statement, could bring further volatility to JPY against a basket of currencies.
• GBPZAR fights to establish stable trading range over a period of unpredictability.
• Very little information released in Europe apart from EUR current account assessment and EUR Consumer Confidence at 3.00pm.
• Monday 23rd brings with it early morning EU manufacturing and services data from France and Germany.
• The UK awaits Revised GDP figures for the previous quarter, and sentiment should seek to play down MPC’s downward growth revision. 

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.

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