U.k Currency Report-market Report

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.

A return of risk appetite helped the pound and the euro claw back some of their respective losses against the US dollar on Monday. The European Central Bank said it only bought minimal amounts of government bonds from the euro zone easing some of the concerns about the economic strength of some of the euro zone members. Investors took this as a healthy indication it might not all be doom and gloom in Europe and began to buy back in to riskier assets. US and European stocks rose to claw back early losses which also helped the riskier currencies make gains as many of them follow equity price fluctuations.

The pound managed to fight back from a three week low against the dollar to hit a session high of $1.5696, nearly a full one percent higher than the low of the day of $1.5555 reached as the London markets opened.

Disappointing housing data from Right move prevented sterling making any headway against the euro in the early part of the session. The data showed that house prices fell by 1.7% last month making it the second month in a row that prices have fallen. The pound suffered some selling pressure against the euro and fell to 1.2155 around noon after being above 1.22 before the housing data filtered through in the early hours.

The euro climbed back up to hit a session high of $1.2868 against the US dollar nearly a cent higher than its open price.

Apart from UK housing data, Monday was a fairly quiet day in terms of data announcements. From a UK point of view, the highlight of the week is on Wednesday when the minutes from this months Bank of England monetary policy meeting are published.

Quantitative easing was thought to be a distant memory now, but Governor Mervyn Kings statement last week shows it is still firmly on the minds of the MPC. Any comments published in the minutes about additional QE, could and probably would have a very negative impact on the pound.

Additionally the split on voting for the interest rate levels will be eagerly awaited. The main question is whether any of the other MPC members have joined Andrew Sentences opinion that now is the right time to start to raise rates. Many of the other members feel the UK economy is still too weak, but it is only a matter of time before other members believe the time is right.

Reports say that from a technical point of view that the pound will remain popular with investors if it continues to stay above its 200-day moving average at $1.5504.

A fall below that level could open the door to further losses towards $1.5320, the 38.2% retracement of its recovery from a May low around $1.4230 to recent highs just shy of $1.6000.

Data shows that traders averaged out having more sterling buy positions than selling, this is the first time this has happened since mid 2008 and a clear sign that sentiment is changing to become more positive towards the pound.

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.

by: RusselMori

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