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.
We saw stronger than expected
UK retail sales survey on Thursday, which had little impact on sterling as
Investors cautiously await the
Federal Reserve Chairman, Ben Bernanke’s speech and gross domestic product data
later today.
The UK CBI survey showed UK
retail sales growth at a three-year high, rising to
+35 in August from +33 in July, well above forecasts of +20.
This surprisingly strong data
suggests July’s surge in the official retail sales data was not a one-off and
the recovery of the economy is seen to
continue in the third quarter.
A surge in manufacturing and
business services propelled growth to
1.1%, its fastest pace in four years.
A second reading is due today and will give a breakdown by expenditure.
Societe Generale except a rise of 0.5% on the quarter after falling 0.1% quarter
1.
Sterling needs to get above the highs of this week at $1.5620 to sustain any rally, however, the pound remains
vulnerable to any rise in risk
aversion if investors feel that a US
slowdown will mirror through to the
global economy as a whole, leaving them inclined to
seek the safety of the likes of the dollar and the Swiss franc.
French president Nicolas
Sarkozy, today called upon the 20 largest economies to
work together in order to get the global monetary order in line.
“We must define a new
framework for discussing currency movements”, Mr Sarkozy, adding that China
would need to be included when
talking about exchange rates, as they have accumulated huge FX reserves.
He also mentioned the need to reduce the dollars dominance as the reserve
currency of choice, calling for a greater role for alternative currencies.
Thursday also saw Gold steady
on price, having hit its highest level in two months earlier in the day, after
US employment data beat expectations, boosting the dollar and other risk-linked
assets such as equities.
The US Labour Department have
confirmed that the number of people claiming jobless benefits for the first
time fell by more than expected, taking the edge off some of the concern about
the ability of the economy to
generate jobs.
Although this data provided a
slight relief to the economy bulls,
analysts claim that the overall macroeconomic backdrop remained uncertain
enough to wet investor appetite for gold.
Gold struck a lifetime high
of $1,264.90 in June, partly due to
the US economy slowdown and a cooling in several major engines of growth, such
as China.
“Everybody was
optimistic on the economic front back in midsummer, and hence gold was backing
off as people were putting risk back on the books and unwinding safe-haven
positions” said Scotia Mocatta. “That optimism has disappeared nearly as fast
as it arrived. With a string of bad numbers out of the States and the Dow
struggling to hold 10,000, the
currency markets have become increasingly unnerved by it all” they said.
The dollar, which
up until recently has acted as a refuge against volatility in other currencies,
has come under pressure as cracks in the recovery of the economy have materialised.
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.
