Prime Minister

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 <?xml:namespace prefix = st1 />UK

• On Friday, GBP/EUR reached a high of €1.1993 but closed at the session low of €1.1890. Nearly two cents below last week’s close of €1.20755.
• Against the US dollar, sterling shed almost 0.5% in the afternoon but the pair bounced off the 1.5640 resistance level to touch a high of 1.5740 in late evening trade.
• GBP/AUD rose sharply from the day’s low of 1.4710 to the high of 1.4811 in the middle of the day.
• Prime Minister Cameron is attending the European Leaders’ summit today, his first meeting with European leaders since having vetoed treaty changes in December. His objectives are to protect the single market stating, “we want them to get their economies sorted out because that's causing us problems over here”. 
• Sterling continued its losing streak against the Indian Rupee touching it’s lowest since October 2011 at 77.1530. 

ELSEWHERE

• This week the spotlight is on the EU leaders’ summit which begins today and seeks to finalise operational details of the new fiscal compact by firstly institutionalising budget discipline in the region and secondly to reach an agreement on private-sector involvement (PSI) in the second Greek bailout which has now increased to $145bn.
• Market stakeholders will be looking for a speedy and practical implementation plan as well as a strict policy on offenders. However German 10 year bonds and European stocks have already fallen in anticipation of yet another failure to reach a viable conclusion.
• Spanish GDP contracted 0.3% in Q4 last year, indicating the economy’s approach toward the second recession since 2009 and also highlights the lack of effect government efforts have turning the situation around.
• Nicolas Sarkosy has stated his plans for a France-only 0.1% tax on financial transactions to be initiated in August. EU finance ministers are due to discuss a Europe wide levy in March although unlike the French proposal this is not intended to affect the bond market.
• Euro had made gains against US dollar on Friday, after opening at $1.3092 the pair had gained around 0.5% by lunchtime and rose a further 0.3% in the afternoon to post a 6 week high of $1.3225.
• The US had some disappointing data releases, the biggest surprise was the annualised US GDP for Q4 2011. The figure of 2.8% fell short of consensus by 0.2% but still made significant improvements on the previous figure of 1.8%.
• In addition, the consensus on US Real Personal Consumption Expenditures was shown to be too optimistic as the actual figure of 0.1% fell short of projections by 2.2%.
• The dollar’s only redemption was in the form of January’s Consumer Sentiment Index from Michigan, coming in at 75 it beat expectations by 1.1 and December’s release by 5.1.

DATA TO LOOK OUT FOR (all times GMT)

• Germany, releases CPI figures for January today. Expectations are for inflation to have fallen by 0.1% to 2.0%
• The US publish Personal Consumption Expenditure figures at 1:30pm today, all components are expected to remain fairly similar to last month’s figures.
• German retail sales however are pitched to be up 1.8% on December which will be a solid indicator of positive consumer sentiment if it materialises.
• Italy is trying to auctions as much as €6bn of five- and 10-year bonds today.
• Japan also has a variety of data out today, the most significant being unemployment figures for December. Whilst the consensus predicts no change from November’s 4.5, it is important to note that the figure was 5.10 just 12 months ago. 

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).

IN THE UK

• Wednesday saw The MPC minutes reveal a unanimous vote to hold UK interest rates at their record 0.5% low for another month and although members did not rule out the possibility of further QE completely, they did vote to hold the current facility at £275bn.  Their sentiments were broadly dovish which pushed the pound to an 11 month high against EUR.
• Public Sector Net Borrowing came in under the 15.5B expected volume at a level of 15.2B.
• Ratings agency Moody’s acknowledged the severity of the UK plight, but asserted that Britain deserved to retain its AAA rating which helped the pound gain against EUR.  GBP/EUR breached 1.20 with a high from the day of 1.2043.
• UK retail insolvencies may reach the highest level in four years according to restructuring firm ALIX Partners; poor forecasts for UK retail sales over the Christmas period may put a dampener on the headway made by the pound in recent days. 
• GfK NOP UK consumer confidence fell to its lowest level since February 2009 decreasing -33 points in December from -31 the month before.

ELSEWHERE

• Although the number of Existing Home Sales in the US fell short of the expected 5.04M to 4.42M realtors are happy to see a month on month increase (in spite of a change to the calculation metrics that had been used since 2007).  USD moved up to a high of 1.5662 against the pound simultaneously.
• European banks have asked to borrow €489bn from the European Central Bank’s new three-year loan facility, smashing expectations forecasted at €293bn.  Demand within the banking sector for this short term liquidity is mirrored by an on forecast level of European Consumer Confidence which published a -21 response.
• Danish Prime Minister Helle Thorning-Schmidt faces domestic opposition to the proposition of deepened fiscal ties within Europe even after he vowed to fight on for unity in the area.
• Rumours of a French sovereign debt downgrade were still doing the rounds yesterday, which served to further sour sentiment.
• EUR/USD failed to move outside its range bound trading, and analysts feel that the risk is now to the downside for the single currency as risk off returns to the market.  At present 1.3080 represents the immediate level of resistance for the pair after EUR attempted to win favour at 1.32, but pundits feel that 1.30 could well be tested as yesterday’s lows signified an important break.
• New Zealand’s quarter on quarter GDP figures achieved higher than market expectations reaching 0.8% as opposed to an expected 0.6%; this has seen GBP/NZD move down to 2.0353 overnight following sustained trading in GBP favour over the past week.

DATA TO LOOK OUT FOR (all times GMT)

• Data is somewhat soft for today with Final GDP and quarterly Price Index figures released at 13:30 for the United States.
• Final GDP figures are expected to come in at 0.5%
• US unemployment claim, expected to be higher than the previous 366k posting, are also due at 13:30.
• Core Durable Goods Orders also make appearance on Friday which may put pressure on the greenback.

Portfolio and fund managers will be looking to window dress their portfolios before year end, so watch out for a return to risk off an quality as the week draws to a close.

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).

IN THE UK

• The pound had an impressive day against the euro progressively rising throughout the session, breaking through the €1.18 mark in the late afternoon and hitting a high of €1.1829 late in the US session, the highest since late February.
• GBPUSD saw a fall of around 0.6% to the day’s low of $1.5537 early in the session. The pound had a brief recovery peaking at a high of $1.5653 before settling down in the $1.5580 to $1.5600 range.
• British 10 year bond yields remained only 0.09% higher than the US T-bonds and just 0.04% above the German bund.
• The coalition government was fiercely split over David Cameron’s actions last week at the EU summit. Deputy Prime Minister and leader of the Lib Dems Nick Clegg was absent from yesterday’s parliamentary session.
• The PM maintained that he vetoed Britain’s acceptance to the terms presented in the summit because of ‘insufficient safeguards’. 
• This morning Core CPI figures show a decline, 3.2% from 3.4% last month and the more important measure of inflation, CPI fell to 4.8% from 5.0% month. Although still much higher than the target rate of 2.0% The Bank of England will be pleased to see the fall.

ELSEWHERE

• The euro suffered across the board as western markets digested the disappointment of last week’s EU summit which apparently did nothing to quell fears over the future of the trade zone.
• The disappointment was underlined through warnings issued by major ratings agencies to EU leaders that they had made insufficient ‘decisive policy measures to end the crisis and little to ease pressure’. 
• Moody’s added to the stresses on the Eurozone by adding eight of Spain’s banks and two Spanish holding companies on review for a possible credit rating downgrade. The ratings agency cited increased loss estimates from the commercial real estate market and weakening growth in the economy.
• Risk appetite took a hit as investors feared the worst and EUR/USD displayed a steady decline as investors. The pair opened at the session high of $1.3377 and closed at $1.3179, just off day lows of $1.3163.
• The USD’s performance was tracked closely by its fellow safe haven currency, JPY as expected under such risk driven market conditions. Both made significant gains against sterling in ahead of the European session in anticipation of the effect of Friday’s EU summit. The anxiety had subsided on both shores by 10am.
• Disappointing figures in the US Monthly Budget statement last night showed the excess of Federal outlays over receipts increased by almost $40bn from -$98.47bn to -$137.3bn
• Australia’s Trade Balance fell surprisingly to $1.595bn, well off the consensus of £2.0bn. Aussie Home Loans were up 0.7% against expectation of zero growth, GBPAUD reached a high of 1.5524 from a low of 1.5322.
• Japan’s Consumer Confidence figures for November were revealed lower than expected at 38.1, down from 38.6 the month before. Machine Tool Orders in November fell to 15.9% down from 26.0% the year before but in contrast, the Tertiary Industry index demonstrated a big boost in domestic services, up from -0.7% to 0.6%.
• This morning ZEW surveys in Germany and the Eurozone both show that Economic Sentiment has improved in December.

DATA TO LOOK OUT FOR (all times GMT) 

• Retail Sales figures are released at 1.00pm in the US, the markets are expected the results to remain similar to last month with Sales with Autos rising to 0.6% whilst the figure without falling to 0.5%.
• The US Fed Interest Rate Decision is a 7.15pm, it is highly unlikely there will be any change to the current 0.25% and therefore the results and accompanying report will have little effect on the markets.
• Overnight in Australia, Westpac Consumer Confidence figures are released for December, last month’ figure was 6.3%

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.