Volatility in investment market and currency exchange remains a challenge

Written by admin on May 10th, 2011

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.   

The pound rose to a new three month high against the dollar after strong UK economic data on Friday and following gains in other higher risk currencies after the European bank stress tests.
UK and global share prices rose on Monday after the test results late last week helped to prompt demand for riskier assets even though some investors were not fully convinced about the credibility of the tests. A bullish set of data late last week showed the European economy may be doing much better than previously thought. Only 7 of the 91 banks tested failed, prompting investors to take a bit of a gamble.
Figures on Friday showed the UK economy expanded a surprisingly strong 1.1% in the second quarter, suggesting the economy was in a much better position than many had believed, and this was still supporting the pound on Monday.
Still, some analysts were sceptical that the pound would significantly extend its rally, given the view that economic growth momentum may sputter as the UK government implements deep spending cuts and tax rises later this year. “The GDP data rounded off a week of generally stronger UK data, including retail sales and M4 growth,” UBS analysts said in a note.
Signs that the economy may already be facing headwinds were evident in a reading of UK house prices by Hometrack, which on Monday showed an average fall of 0.1 percent in home prices in July, the first fall since April 2009.
At 8.30 am, sterling had climbed around 0.4% to .5502 rising above limit order levels of
.5500 to hit its highest since mid-April. Further sterling gains were capped by the pound’s 200- day moving average, located around .5560 on Monday.
Against the euro the pound had gained around 0.5%, breaking the €1.20 mark to hit a high of €1.2023 before falling back to €1.1950 in the late session.
Sterling had inched higher against both the euro and the dollar last week, and the latest positioning data showed speculators continue to trim short positions in the currency, seen as a supportive factor.
Analysts expect the pound may consolidate gains this week, given a lack of major UK events or data.
Data from the Confederation of British Industry on UK retail sales in July are due on today, while additional data on UK house prices and figures on consumer confidence and credit will be released on Thursday
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.

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