Sterling Slides Lower- Yet Remains A Safer Investment Opportunity

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 income drawdown, flexible pensionsor QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension drawdown, 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,income drawdown now including flexible pensions, a QROPS and QNUPS (Qualifying non UK Pension schemes).

Sterling had yet another quiet day, in terms of data releases on Wednesday, as it enjoyed a day of trading on risk sentiment. So in absence of any real compelling reasons to buy the pound, both GBP/EUR and GBP/USD moved lower over the course of the day. Any investors who are holding Sterling will be looking forward to Fridays Q2 GDP release, to make up their
mind of whether to continue holding Sterling or jump to another asset. ...
... The pound was also supported on the perception that the UK is a safer investment destination given U.S. fiscal problems and a stuttering economic recovery, while the Euro
zone debt crisis shows few signs of resolution.

For the second day in succession, German economic data has missed pre-forecasted figures and posted results far below what was expected. Wednesday’s data that missed expectations was IFO Business Climate Survey, of which followed Tuesdays poor reading of German ZEW survey.

Even with the poor data being released from Germany, the powerhouse of the Eurozone region, who forms a majority of the Euro zones GDP figure, the Euro continued to trade resiliently by holding its own against both the Dollar and Sterling.
Across the pond it appears to be the calm before the storm, Wednesday afternoon’s release of the US Durable Goods Orders figure for July came out much better than expected posting a figure of 0.7% against a forecast of -0.3%. This provided a much needed boost following a recent run of poor US data. However it seemed the main focus for the market this week is Fed chairman Ben Bernanke’s speech on Friday this week at Jackson Hole. Analysts have said the market is positioned to
sell the dollar if Bernanke suggests he is prepared to restart massive U.S. asset buying to prop up the economy.

Some believe speculation has been overdone that the Fed will signal economy-boosting measures -- or even more quantitative easing -- and saw the risk of a slight dollar correction, which may put some downward pressure on the pound.

IN THE UK
• Sterling slides against the US dollar and Euro during afternoon trading posting lows of €1.1372 and $1.6416.
• The UK released no significant data yesterday, as heads now turn towards Friday’s release of Q2 GDP figure.
• Despite losing out yesterday, sterling is still considered to be a safer investment opportunity over the US Dollar, and their debt issues.
• UK and Swiss Governments agree a deal that means that UK residents with undeclared savings in Swiss bank accounts could now be subjected to tax, could raise as much as £5bn in revenue.
• Surprising the markets this morning, Nationwide Consumer Confidence was slightly better than expected at 49, however the figure was lower than last months and sterling is posting losses against most currencies this morning.

ELSEWHERE
• German IFO data missed expectations heavily posting a figure of 108.7 against a forecast figure of 111.2, the second consecutive piece of data to miss forecasts. This is the strongest decline since the fall of Lehman Brothers and suggests that the German economy is facing a difficult H2 2011.
• Eurozone’s Industrial New Orders, month on month data misses expectations massively posting a figure of -0.7% against a forecast figure of 0.6%.
• US Core Durable Goods (excludes transportation costs) month on month, beats expectations posting a figure of 0.7% against a figure forecasted of -0.3%.
• US Durable Goods Orders, month on month beats expectations posting a figure of 4% against a forecasted rate of 2.1%.
• Rumours now circulating that Jackson Hole meeting tomorrow might not be where new US measures are revealed, possibly meaning all the fuss is for nothing. However most experts for the time being are expecting some policy changes to be made.
• German President has said that Germany is nearing its limit on the amount it will throw at the bailout fund. If the debt crisis continues to worsen if the Germans make a stand there simply won’t be enough money in the pot to continue the bailouts.

DATA TO LOOK OUT FOR
• UK CBI Realised Sales expected to show a figure of -10 against a previous month’s figure of -5.
• Bank of England policymaker Martin Weale speaks at 12.00pm.
• US Unemployment Claims due to be released at 1.30pm and to post a forecasted figure of 403K against Junes reading of 408K.

Gerard Associates Ltd advises UK residents, expats and people considering living abroad on the technical and currency options available for Pensions, pension income drawdown, flexible 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.