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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).

There was a rich vein of data on Thursday, starting with UK retail sales figures for August. The

latest Office for National Statistics showed retail sales contracted last month as sales

volumes were down 0.2%. Figures had slipped back 0.2% in July and 0.8% in June. August’s

figures had been affected by the riots that hit major cities throughout the UK the ONS said.

Rising prices meant that total value of sales in August was 4.7% higher than in August last

year, even though sales volumes were unchanged.

In a second report for the UK, Britons’ inflation expectations climbed to their highest level in

three years last month, underlying the impact soaring prices are having on households.

UK consumers questioned in August, expected prices to increase 4.2% over the next

year, the Bank of England said in a quarterly survey published in London yesterday. That’s up

from a reading of 3.9% in May.

The European Central Bank Monthly Bulletin, published one week after the September 6

decision to maintain interest rates unchanged, presented the current economic situation in

the Eurozone and the risks to price stability.

According to the official publication, inflation has remained elevated and is likely to stay

above 2% over the months ahead before declining next year. Inflation expectations in the

euro area must remain firmly anchored in line with the Governing Council’s aim of

maintaining inflation rates below, but close to, 2% over the medium term.

The pace of economic growth in the euro area decelerated in the second quarter, following

strong growth in the first quarter. Looking ahead, the Governing Council expects the euro

area economy to grow moderately,

subject to particularly high uncertainty and intensified downside risks.

The euro zone also releases the consumer price index for August, where the index expanded

by 0.2% from the previous drop of 0.6% in line with expectation, in addition, the annual

consumer price index expanded by 2.5%, in line with expectations and the previous reading.

Moreover, the core consumer price index also was unchanged in August at 1.2% in line with

expectations.

Over in the US, the consumer price index rose a seasonally adjusted 0.4% in August

while the core rate rose 0.2%, the US Labour Department said, yesterday.

The index has risen 3.8% in the last 12 months before the seasonal adjustment, the

department's Bureau of Labour Statistics said in a release. That is slightly higher than the 3.6% annual rate in July and the consensus expectation for August, which was also 3.6%.

The core inflation figure, which excludes food and energy, rose 2% on an annual basis

in August. From July, core prices rose 0.2%.

IN THE UK

Retail sales in the UK come out at -0.2%, showing a contraction in last month’s retail sales. This was mainly due to the riots that hit major cities throughout the UK but better than forecasted

• Rising prices showed the total value of sales in August was 4.7%, higher than in August last year.
• Britons’ inflation expectations climbed to their highest level in three years last month showing pressures on households on the back of soaring prices.
• UK Consumers expected prices to increase 4.2% over the next year, up from a reading of 3.9% in May
• GBPEUR hits a low of 1.13749 on the day and a high of 1.1498 whilst GBPUSD hits a low of 1.5730 and a high of 1.5868

ELSEWHERE

• Swiss Industrial Production came out at 3.6%, greater than expectation of a 3.3% reading and the Swiss Libor rate remained unchanged under 0.25% and will continue to target a 3-month Libor rate at zero
• The Eurozone core CPI for August, remained unchanged at 1.2%, in line with forecasts. The ECB Monthly Bulletin showed inflation elevated and is likely to stay above 2% over the next few months before declining next year.
• In the US, CPI rose a seasonally adjusted 0.4% in August, while the core rate rose 0.2%
• The Philly Fed Manufacturing Index actually showed an improved figure, rising to -17.5 from -30.7 last month, although economists had envisaged a rise to minus 15. Readings greater than zero signal expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware.
• EUR/USD hits a low of 1.37032 and a high of 1.3957 as demand for the euro returns.

DATA TO LOOK OUT FOR

• A relatively quiet day on the data front, starting at 10.00am, with the Eurozone Trade Balance.
• Today is the first day of the ECOFIN meeting, where discussions will be made on a range of financial issues, such as euro support mechanisms and government finances. It will be very interesting to see how the market fares on the back of this.
• 1.30pm we will have the CAD Foreign Securities Purchases figure. This measures the total value of stocks, bonds and money-market assets purchased by foreigners.
• 2.00pm will see the TIC Long-Term Purchases which shows the difference in value between foreign long-term securities purchased by US citizens and US long-term securities purchased by foreigners.
• Finally at 2.55pm, we have the Preliminary UoM Consumer Sentiment, measuring the level of composite index based on surveyed consumers.

 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.

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