Sterling Loses Ground New Finance Minister In Greece

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).

Despite the markets being very concerned about an agreement not being reached in Greece sterling lost ground against the European single currency on Friday following reports that Germany and France had agreed to work with the ECB to resolve the problem. The Greeks did manage to get something done during the week, their first step forward was to remove their finance minister and replace him.

Thankfully for the UK the unresolved situation in Greece drew the gaze of the markets away from what was a very poor week for ...
... the UK on the data front, with retail sales being the pick of the bunch. Had the problems in Greece been less prevalent we may have seen sterling
loose further ground.

With the Euro zone interest rates expected to increase to 1.5% within the next month and sterling’s interest rate announcement now not expected until mid-2012, expect to see sterling remain under pressure moving forward. This morning sterling was trading at
GBP/EUR 1.1322.

Many people in the markets still see the Euro as overpriced, however, with very little else to choose from it is a case of necessity for investors. Throughout the last week the US dollar has seen some of it's safe haven status return, with many investors returning to USD from
the Euro following the failure of anything concrete being agreed in Greece. This has led to USD strength across the board with GBP/USD returning towards the 1.60 level with a session low of 1.6078 last week and EUR/USD being driven back down towards 1.40.

IN THE UK
• Sterling struggles across the board on the back of poor UK data.
• In particular the pound fell towards the $1.6078 low set on Thursday against the dollar as the troubles in Greece caused investors to shed positions in riskier currencies such as the pound
• UK banks reported to have pulled billions of pounds from euro zone over fears of major financial event.

ELSEWHERE
• An agreement yet to be reached on Greece but Germany and France pledge help, this helps the euro reverse some of its recent losses, against the pound it strengthened from a high of €1.1466 to close on Friday at €1.1292
• US dollar regains some of it’s safe haven status and maintains gains against the euro, EURUSD falls to $1.4145
• Next on Moodys’ hit list is Italy, the credit ratings agency have suggested they may drop their rating after their 2010 debt amounted to 119% of GDP, second only to Greece
• Spain asks Russia to invest some reserves in Spanish debt.
• FOMC on Wednesday likely to officially announce end QE2, Fed Chairman Ben Bernanke is likely to reiterate that the balance in risk does not favour further asset purchases, meaning QE3 is unlikely and these comments are expected to be dollar positive.
• China property prices suggest some signs of moderation in the Chinese economy.
• Over the weekend EU finance ministers failed to reach an agreement on the Greek scenario and did not release the loan payment.
• Greek PM Papandreou is being forced to deliver crippling budget cuts despite massive domestic opposition before the EU will release the payment, the Greek government are very much caught between a rock and a hard place and some analysts think this could lead the euro to weaken to 84p (1.1904) against the pound

DATA TO LOOK OUT FOR
• Apart from German Produce Price Index and Eurozone Current which both came in just below par there is little in the way of data announcements released today. However there are speeches from ECB members Weidmann, Stark and Trichet and then later this evening US Treasury Secretary Geithner.

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 and QNUPS and investments in a clear format allowing all customers to make an informed choice.
This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.

Russel Mori writes for Gerard Associates LTD, for more information on
QROPS, QROPS Pensions, QROPS List, QROPS Providers, QROPS Guernsey info available online.