Pound Slips To The Lowest- Uk Could Have To Borrow

By Author: Russelmori
Total Articles: 25
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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).
The pound slipped to its lowest in a week against the USD before today's report of retail sales, which came out at 1.3% compared to an expected 2.4%, which is considerably lower then the previous result of 5.1% in Jan, pushing cable to a low of $1.6129. In addition, Januarys' growth figure was revised down from 1.9% to 1.5%. On top of this Moody's the rating agency said the continuation of slow growth could be detrimental to the UK's AAA credit rating, as the nation would be forced to borrow ...
... money to boost a dwindling economy.
This comes after Sterling advanced to $1.6401, on Tuesday the strongest level since Jan. 19, 2010, on speculation the Bank of England would raise interest rates after inflation was revealed at 4.4%. The Euro declined against the dollar and the yen after Moody's Investors Service cut the ratings on 30 Spanish banks following a sovereign downgrade. However, the Euros' decline against the dollar was short-lived as Spanish bond yields were not raising as much as Portuguese bonds after the resignation of Prime Minister Jose Socrates, resulting in Fitch downgrading Portuguese credit rating to A- Whilst the Euro still trades strong for the time being pressure will mount as Ireland, Greece and Portugal in the coming weeks will be expecting large bailouts as announced in the EU economic summit yesterday. A bailout for Portugal may total as much as 70 billion euros said two European officials with direct knowledge of the matter. Also continuing fears for the Euro zone German Minster, Merkel praised Socrates tough austerity measures, suggesting Germany may be moving away from fully backing the Euro.
Across the Atlantic we saw fewer Americans file applications for unemployment benefits last week. Jobless claims declined by 5,000 to 382,000 in the week ended March 19. The number of people receiving benefits fell to the lowest level in almost three years. Giving the Greenback a small but much needed boost in the markets. The Dollar is still one of the worst performing currencies over the past 3 months and today failed to gain against the Euro as fears continue to grow over European debt worries.
In other news New Zealand's dollar rose to a three-week high against the greenback after the economy expanded in the fourth quarter, avoiding a second straight contraction with GDP figures rising by 0.2%. The Canadian dollar strengthened for the first time in three days as crude oil, the nation's biggest export, traded at almost the highest level in 29 months.
Finally the G7 currencies gave the go ahead to intervene with the Yen, suggesting that the Yen may replace the US dollar as the global funding currency and bring back the carry trading associated with the yen prior to the 2008 credit crunch.
In today's news all eyes will be on the US were GDP figures are expected to fall from 0.8% to 0.4% and consumer sentiment also expected to fall from 77.5 to 68.2. Putting the Dollar under continued pressure in the markets. In Germany, Europe's largest economy, Consumer confidence is expected out at 5.8% compared to a previous 6%. The EU economic summit continues and may provide more info on how the EU debt crisis will pan out.
IN THE UK

Retail sales in UK fall to -0.8% in Feb, a fall from 1.5% the previous and below consensus, the pound drops to $1.6129.
Budget reports growth forecast for 2011/12 revised down from 2.1% to 1.7% allowing the euro to gain on sterling to a low of €1.13511
After downgraded growth forecast, ratings agency Moody's say the UK's AAA rating may come under pressure in the near term.

ELSEWHERE

Moody's Investors Service cut the ratings on 30 Spanish banks seeing the euro drop in the market for a short period.
Resignation of Prime Minister Jose Socrates, results in Fitch downgrading Portugal's credit rating to A-, Bailout on cards but reports suggest this might not be immediately and won't change the ECB's stance on raising interest rates.
Euro shakes off earlier bad press, excitement about EU summit helps it push up to $1.42 and new 5 month high against pound.
US data shows Jobless claims decline by 5,000 to 382,000, showing a slight improvement in the US labour market

DATA TO LOOK OUT FOR

The EU summit continues and will undoubtedly give us more surprise in terms of the EU debt situation.
GDP figures in US expected at 3.0% showing a slight rise from Q3, this would suggest the US economy is recovering well.
US Reuters/Michigan Consumer Sentiment Index expected to drop 68.2

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 Pension including QROPS Transfers and QNUPS and investments in a clear format allowing all customers to make an informed choice.
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Russel mori writes for Gerard Associates LTD, for more information on QROPS Pensions, HMRC QROPS, QROPS, QROPS List, QROPS Guernsey info available online.