Factors affecting currencies for UK Pensions and QROPS

Factors affecting currencies for UK Pensions and QROPS

Continuing our daily look at factors affecting currencies allows 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 Bank of England kept rates on hold yesterday at 0.5% as was widely predicted, Interest rates have now been at the 0.5% level since March 2009. The BoE also decided not to increase quantitative easing further into the British economy. All eyes will now be on the new government's budget which will be held 22nd June as this will details what's next for fiscal tightening.

The MPC has kept the same policy and economists are of the view the BoE are adopting a "wait and see" approach ahead of the budget and the coalition government's plan to tackle the deficit before it makes its next move on rates.

There has been an announcement by the coalition of a 6.2bn spending cuts which will depress the economy and restrict growth, therefore taking away the need for increased rates. The MPC is weighing up exactly how fragile the UK economy is, as well as taking into account the problems in Europe against risking the return of inflation if rates stay low for too long.

The pound strengthened against the dollar as the Bank of England continued its bond buying programme as the British economy continued to show signs of recovery. The pound strengthened to $1.4645 as of 2:45 p.m. in London, from $1.4528 Wednesday. Sterling bought 133.73 yen, up from 132.66 Wednesday. It weakened 82.71 pence per euro, from 82.46 pence.

Elsewhere on the Continent the ECB kept rates at the record low of 1% yesterday as financial markets are waiting for further detail on the programme to buy up debt from the Euro zone countries. The Euro rose against the majors due to Trichet's press conference after the announcement. EUR/USD rose to 1.2133, this is the highest price since last Friday. Shortly after the pair dropped back trading around the 1.21 mark, but it is worth noting this is still trading over a 100 pips above the price it opened on. The Euro clawed back some of the losses made earlier in the week against the pound and hit a low of 1.2070.

The fact that ECB interest rates have been left at 1.0 percent is hardly news, but any comments regarding the banks bond purchases at this afternoons press conference will be of much greater interest.

Today see's the release of UK producer price for May and Manufacturing production for April. In America we have the retail sales for May.

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 to avoid the offshore casino.

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