UK Economy in Recovery Phase - Economists suggest 16-nation common currency split

UK Economy in Recovery Phase - Economists suggest 16-nation common currency split

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.

Thursday was a pretty flat day with regards to market data, as the Americans enjoyed a big feast on the back of Thanksgiving.

In the UK, a number of MPC officials including Bank of England Governor, Mervyn

King, faced the Treasury Select Committee to discuss the November Inflation Report and the CBI Distributive Trades survey.

The Inflation Report showed that the UK economy continues its steady, albeit slow, pace of recovery from the deepest recession in seven decades. Even though global demand remained weak and output along with global recovery remained fragile, the report judged GDP growth to be above its historical average throughout the upcoming period.

Inflation is expected to remain above the desired 2% rate, which could pressure the Committee to hike interest rates, a call that MPC member, Andrew Sentence has been pursuing since July.

The CBI's trades survey data was also better than expected, rising to +43 in November from +36 in October. Retailers were confident that this trend upwards will continue with an expected for December of +45. However we must remember that the rise in VAT at the start of next year may well cloud the longer-term outlook.

The euro came under renewed pressure yesterday, dipping close to a two-month low against the dollar as euro zone debt woes, showed little signs of abating, keeping investors nervous.

Traders said Portugal and Spain were increasingly closing in on the need for financial assistance, while Ireland's belt-tightening measures came under attack for sticking to optimistic growth assumptions.

Most economists in the Britain and the United States, have suggested the 16-nation common currency launched in 1999 could split because of the peripheral countries' high debts and deficits, together with a loss of competitiveness with Germany. Senior euro zone officials dismissed any risk of the single currency area breaking up even though financial markets forced the borrowing costs of Portugal and Spain to record highs.

The euro tumbled earlier this week after Angela Merkel, the German's Chancellor, alarmed markets by saying the single currency was in an "exceptionally serious" situation.

In the Far East we saw South Korea's defence minister resign, two days after an attack by North Korea and amid criticism the response by the South was too slow.

President Lee Myung-bak accepted his minister's resignation "to improve the atmosphere in the military and to handle the series of incidents", a presidential official said.

The events that have occurred in this part of the world, has clearly got investors very nervous and therefore averting from piling into risky assets and buying the safe haven currencies like the US dollar and Swiss Franc.

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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