Sterling falls Low While Euro holds well in the Market

in Uk

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).

It has not been a good day for the British pound, with the UK currency coming under

pressure from all sides. UK Retail sales data was particularly bleak, showing a like-for-like

slump of 3.5% in March, the worst figure in almost six years. Lower spending patterns are

becoming the norm among UK consumers, with clothes and book sales seeing their largest

declines since 2009 and 2005 respectively. This saw sterling fall down to a low of $1.6237

where it remained within range for the majority of the afternoon trading.

Elsewhere in the UK unemployment fell by 17,000 in the three months to the end of

February to 2.48 million, the first drop since last autumn, official figures show. The Office for

National Statistics (ONS) said the rate of unemployment in the UK had fallen to 7.8%. The

number of people claiming jobseeker's allowance rose by 700 in March to 1.45 million, the

ONS said. Creating the GBP/EUR fell to a 7 month low of €1.1205. These results mixed with

earlier reports of March’s falling inflation release pressure from Mervyn King to possibly

raise rates in the near term.

The Euro continues to hold well in the market even though the Industrial production level

fell quite sharply from an expected 0.8% to 0.4%, investors seem to be holding onto Euros

which is allowing it to hold, amidst speculation that the EMU may continue to raise interest

rates in the near future. The Euro pushed to a daily high of $1.45199 just falling short of the

key resistance of $1.452.

In the US retail sales rose in 0.4% in March, barely below market expectations of a 0.5%

increase while retails sales excluding cars rose 0.8% surpassing analyst estimates of a 0.6%

gain. Barbara Rockefeller from Rockefeller Treasury Services, Inc. points out that the data is

relevant as sales are a barometer of consumer confidence but affirms that the big news

today is the announcement of the plan to cut the deficit that will be presented by Barack

Obama. President Obama is set to announce long-term proposals for cutting the federal

deficit today. In May, the government may be forced to increase the $14.3 trillion federal

debt ceiling to ensure the U.S. will meet its financial obligations.

The Swedish Krona continues to strengthen as the Government announces improved

forecasts for economic growth, Sweden is now the largest growing economy in Europe and

has seen the SEK move up to a high today of 10.11 against sterling. The Canadian dollar

slipped off in the markets after reports form the Bank of Canada who kept rates unchanged.

Interactive Brokers informs: "The Bank of Canada releases its Monetary

Policy Report today having left policy on hold on Tuesday. At the time it raised its growth

outlook for this year from 2.4% to 2.9% and said that full output would be achieved by mid-

2012. However, it also pared its forecasts for the next two years and warned that a rise in

the currency would dampen export demand."

IN THE UK

  • UK unemployment fell by 17,000 in the three months to the end of February to 2.48 million, the first drop since last autumn.
  • ILO Unemployment Rate fell to 7.8% driven by a rise in employment rather decline in the size of the workforce.
  • Despite some encouraging employment data, GBP/EUR fell to a 7 month low of €1.1205 and cable to $1.6237
  • UK Retail sales data was particularly bleak, showing a like-for-like slump of 3.5% in March

ELSEWHERE

  • ECB’s Weber says further monetary tightening is appropriate and phasing out of non standard measures to continue. This will provide particular significance to EURUSD, because in contrast, the US are nowhere near hiking rates and QE2 is still ongoing.
  • Euro still holds strong against most currencies, EUR/USD high of $1.4519
  • US Retail Sales were slightly better than expected, posting rise of 0.8% ex autos in March, dollar sees slight gains.
  • Fed’s Beige Book survey shows the US economy expanded at a modest pace led by manufacturing.
  • Fed’s Bullard is less dovish than expected and is hopeful for the future.
  • Swedish Krona strengthens as the Government announces improved forecasts for economic growth
  • Risk appetite finely balanced as Japan sees further earthquakes, no tsunami warning. Electronics and auto manufacturers around the world feel the pinch as Japanese exports remain desperately low despite hard work and ongoing clean up.

DATA TO LOOK OUT FOR

  • G7 meeting where the worlds economics will be discussed in depth
  • ECB monthly report may give indications on whether we can expect further interest rates in the near term future.
  • Portuguese Cabinet press conference, bailout terms to be addressed
  • US PPI figures expected slightly better at 1.9% compared to a previous 1.8% and Initial Jobless Claims
  • Most of the Fed members who have not spoken already this week will speak today
  • Chinese data is expected to show inflation rose to 5.2% and GDP rose to 9.4%. Chinese PM has stated that he will need to use a stronger currency and increase interest rates to ensure the economy does not boil over.

Gerard Associates Ltd advises expats and people considering living abroad on the technical and currencyoptions 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.

Author Box
Russel Mori has 21 articles online

Russel Mori writes for Gerard Associates LTD, for more information on QROPS, QROPS Pensions, QROPS List, QROPS providers, QROPS Guernsey info available online.

Add New Comment

Sterling falls Low While Euro holds well in the Market

Log in or Create Account to post a comment.
     
*
*
Security Code: Captcha Image Change Image
This article was published on 2011/04/14