Loan Figures reflect weak consumer confidence

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 or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pensiondrawdown , 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, a QROPS and now QNUPS (Qualifying non UK Pension schemes).

Very interesting day yesterday, starting with UK May Mortgage Approvals, which showed a

less than expected increase in May, according to a report from the Bank of England.

The number of loans approved for house purchases increased to 45,940 in May, from 45,447

in April, less than the forecast of 46,300.

Total Lending to individuals rose £1.3 billion last month, similar to the previous six month

average of £1.2 billion. Annually, the growth remained unchanged at 0.8%.

These figures reflect the weakness of consumer confidence as accelerating inflation reduces

Britons’ spending power at the fastest pace since the 1970’s and concerns about job losses

mount. Banks are also curbing lending as they rebuild their balance sheets. The Land

Registry also claimed house prices fell 0.4% in May, their third decline in four months.

Consumer credit rose by £173m in May, said the Bank of England. That’s less than the

forecasted £400m by economists and suggests households are limiting their borrowing.

Credit-card borrowing climbed by £34m, the least for over a year.

Over in Europe, the Business Climate Indicator fell for the fourth consecutive month in June

2011. The current level of the indicator remains very high, but the consecutive drops

observed may suggest that the euro-area industry has entered a phase of growth

moderation, The drop in The BCI reflects weakening production expectations, export order

books and managers’ employment expectations.

Adding to this, was the European Commission’s monthly survey of economic confidence

across the 17 countries that share the euro, showing a recorded drop in inflation

expectations amongst businesses and consumers. The survey showed manufacturing

confidence fell to 3.2 from 3.8. The decline was driven by a drop in export orders, a worrying

sign for the euro-zone economy.

We have all heard and seen the reactions of the Greek public with proposed tax hikes and

spending cuts. However, the Greek parliament have now voted in favour of a drastic package

of austerity measures to save the country from defaulting on its debts.

They are heavily in debt and the package is needed to win the latest tranche of a €110bn

loan. MP’s passed the measures by 155 votes to 138.

They will hold a second vote today, aimed at law reforms that would allow the package to be

implemented.

Over in the US, the pending home sales report rose significantly, with all areas experiencing

gains from a year ago, industry data showed yesterday.

The report, by the National Association of Realtors, said its pending home sales jumped by

8.2% in May, blowing past expectations for a 2.4% gain.

This is the first time since April 2010 that contract activity was above year-ago levels and the

monthly gain was the strongest increase since last November when the index rose 10.6%.

IN THE UK

• Mortgage Approvals for the UK shows a less than expected increase last month. Number of loans approved for house purchases increase to 45,940 in May, less than the expected 46,300 forecast.
• Consumer Credit rises by £173m in May, less than the forecasted £400m by economists
• Net lending to individuals rises by £1.3bn in May, similar to the previous 6-month average of £1.2bn.

ELSEWHERE

• Greek Parliament voted narrowly in favour of desperate austerity measures, MP’s passing measures by 155 votes to 138, this creates a ‘risk on’ scenario causing EURUSD to rise to $1.4519.
• Business Climate Indicator falls for four months in a row, suggesting the euro zone has entered a phase of growth moderation
• Economic Confidence for the Euro-zone shows a record drop in inflation. Manufacturing confidence fell to 3.2 from 3.8, driven by a drop in export orders.
• US Pending Homes Sales rose much more than the expected 2.4% gain, to show a reading of 8.2% in May.
• The Canadian Dollar surges after Inflation Data rises by 3.7% from a year earlier, exceeding all 24 forecasts in a Bloomberg survey of economists

DATA TO LOOK OUT FOR

• EUR German unemployment rate for June expected this morning Economists not expecting any change in this data.
• The Euro-zone Consumer Price Index Estimate is due out @ 10.00am. So expect some volatility if much different to forecasts of 2.8%
• CAD GDP (Month on month) and (Year on year) due out @ 13.30pm. Will the CAD strengthen furthermore after this figure?
• 
  

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

Sterling falls, UK GDP figure in-line with expectations

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 or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pensiondrawdown , 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, QROPS and now QNUPS (Qualifying non UK Pension schemes).

Sterling fell broadly on Tuesday against the majority of currencies, mainly based on the back

of Bank of England policy makers keeping the option of further QE firmly open if the UK

continues to display poor data readings concerning first quarter growth.

Sterling hit a five month low against the US Dollar posting lows of $1.5912 before running

into reported demand from sovereign names ahead of an options barrier at $1.5900. It also

hit a near three week low against the Euro posting a low of €1.1132, which opened the way

to a key technical level of €1.1111 (90p). Sterling also hit record lows against the safe haven

currency Swiss franc.

The highly anticipated final reading of the UK GDP figure came in-line with expectations at

0.5% for the first quarter, while the annual growth figure was revised down from 1.8% to

1.6%.

"The downward revision to year-on-year GDP was at the margin another reminder that the

UK economic and financial performance remains deeply worrying," said a currency strategist at FXPro. "It could very easily be argued that the UK needs an evenweaker currency," they added.

This data adds to the view that the UK interest rates will be kept on hold at record lows for

the majority of this year, even running the possibility of them remaining at 0.5% into 2012.

The UK also had further disappointing data in the form of our current account reading

posting a figure of -9.4BN against a forecast figure -5.0BN. The reason why this data is

important is because it's directly linked to currency demand - a rising surplus indicates that

foreigners are buying more of the domestic currency to execute transactions in the country.

The Euro was dominated by the Greece debt story further more as the Euro posted a high

against the US Dollar at €1.4397 in the morning. However further gains look limited against

the dollar, ahead of the Greece parliament vote on austerity measures needed to avert the

Euro zone’s first default.

The Euro played host to a slight boost due to a slight increase in investor confidence on the

posting of positive US house data prices and comments from the ECB head Jean-Claude

Trichet that policy makers were in “strong vigilance” mode on inflation.Trichet’s use of key

word “strong vigilance” shows that a further interest rate hike in July could be on the cards.

Across the pond data was fairly light with only one high impact piece being released in the

form of their CB Consumer Confidence figure at 2.43pm. The figure disappointed estimates

posting a figure of 58.5 against an expected figure of 60.8.

IN THE UK

• Sterling fell against a basket of currencies for the majority of Tuesday’s trading session hitting 5 month lows at $1.5909 and lows of €1.1132 against the euro.
• Final reading of first quarter GDP is kept in line with expectations at 0.5%.
• UK’s current account data misses expectations for the 8th consecutive month running.
• Bank of England’s King says more QE is a possibility but not if it would drive inflation higher, colleague Tucker, disagrees with QE but is firmly in the ‘no change to interest rates’ camp
• This morning UK Mortgage approvals come in slightly lower than expected at 45.94k but the figure shows an improvement from last month’s 45.166k

ELSEWHERE

• GfK German Consumer Climate beat expectations posting a figure of 5.7 against a figure of 5.4.
• Greece debt story remains centre of the headlines, ahead of their parliament vote for austerity measures.
• US consumer confidence misses expectations of 60.8, posting a figure of 58.5.
• US Richmond manufacturing index beats expectations posting a figure of 3 against a forecasted 2.
• In yesterday’s conference Trichet confirms ECB ‘strong vigilance’ stance saying April rate rise will not stand by itself
• Wall Street Journal publishes article that Portugal are to accelerate austerity measures as previous programme not enough.
• Euro strong this morning ahead of Greece vote, GBPEUR falls below 1.11 and EURUSD breaks 1.44

DATA TO LOOK OUT FOR

• Headline data today is the Greek Austerity Vote, all other releases today will be overshadowed by results of the voting and how those results are interpreted. A failed vote could lead to significant euro selling whilst a passed vote could see a slight euro rally. The results are expected between 3 and 6pm
• Eurozone Consumer Confidence is released at 10.00am, the figure is expected to fall slightly to -10 from -9.9
• Swiss KOF Leading Indicators are published at 10.30, also expected to fall to 2.23
• Canadian Consumer Price Index inflation figures expected to be released at 12pm and to post the figure of 0.3%.
• US Pending Home Sales month on month expected at 2.4% and to be released at 3pm.

Current Spot Rates (9.30am) 29th June 2011
	USD	EUR	AUD	CAD	CHF	DKK	NOK	SEK	ZAR	JPY
GBP	1.6012	1.1108	1.5106	1.5663	1.3320	8.2886	8.6616	10.23	10.92	129.827
USD		1.4412	0.9434	0.9782	0.8319	5.1765	5.4094	6.39	6.82	81.081
EUR	0.6939		1.3599	1.4101	1.1991	7.4618	7.7976	9.21	9.83	116.877

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

Sterling falls 3 month low- Pound Still under Pressure

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).

Sterling fell to nearly a three month low against the dollar on Thursday and broke the key

1.60 support level after being pressured by a broadly stronger dollar, which rose after the

U.S Federal Reserve on Wednesday confirmed it would end its bond buying programme this

month but offered no suggestion of further economic stimulus for the moment, there was a

slight glimmer of hope as the pound did manage to make gains against the Euro.

The pound continued to come under pressure due to Wednesday’s minutes from the last

Bank of England meeting which suggested that the Bank would think about another round of QE if the

economy does not pick up. Sterling was also weakened mid-morning after the release of UK

CBI retail sales dropped to the weakest level in a year, further reducing the prospect of an

interest rate increase this year. The gauge fell to minus 2 from 18 the previous month. The

pound slumped against 10 of the major currencies throughout the morning, as the outlook

for the UK economy remains pessimistic and the chances of a second quarter contraction

increases.

The pound however did manage to bounce back against the Euro as the single currency was

hurt after European Central Bank president Jean-Claude Trichet warned that the Greek debt

crisis was threatening the stability of the Eurozone. Trichet said the financial stability in the

bloc was “flashing red” as the debt crisis threatened to infect the regions banks. This led

some investors to question whether the ECB would carry through the interest rate increase

in July that it signaled at its meeting earlier this month.

Although concerns about the rising inflation have been its top priority, recent business

surveys from the region’s core countries have indicated softening growth. Eurozone

purchasing managers in June confirmed economic activity continued to lose momentum.

“With the PMI data down more sharply than expected, further evidence of slowing growth

along with the risk dashboard “flashing red” due to sovereign uncertainties may prompt the

markets to question a July rate hike, leaving the euro venerable” said analysts at

Bank of Tokyo-Mitsubishi UFJ.

This helped GBP/EUR hit a high of 1.1298, just shy of the key 1.13 level and EUR/USD to hit

a high of 1.4333 before falling back.

IN THE UK

GBP/USD falls through the key support level of $1.60 to fall to a 12 week low of $1.5936
UK CBI retail sales fall to the weakest level in a year further reducing the prospect of an interest rate hike this year.
Investors still speculating as to whether or not Bank of England will enter into further QE
Remortgaging drops as house purchase approvals remain static
Despite falling against many of its counterparts, GBPEUR rises and hits a high of €1.1298, helped by a flagging Euro.

ELSEWHERE

EUR/USD falls below the key $1.42 level to hit a low of $1.4152 having been over $1.44 a few days before
US new home sales drop 2.1% in May
Gold cuts 4 day rally as Fed boosts the dollar
EU leaders pledge in Brussels to stabilise the Greek economy provided austerity measures in Greece are passed next week.
The risk here is that sources in Greece suggest that the planned budget cuts might not be passed and the bailout of around €78 billion will be withdrawn.
Making the situation worse for the Greek PM, a two day strike is planned next week in protest of the austerity measures.
German IFO figures published this morning are slightly better than expected but have little effect on euro value.

DATA TO LOOK OUT FOR

The main market interest over the coming days will be regarding Greece and news from the EU summit that finishes today. There seem to be a variety of rumours regarding lack of communication and control by the EU so there could be further developments over the weekend.
Mervyn King speaks today regarding the UK economy and the value of the GBP. Any negative comments will send sterling tumbling
US Q1 GDP 3rd release due out at 1.30pm, expectations are for this to come in at 1.9%, anything above will strengthen the dollar
US durable goods orders for May, census are this will come in at 1.6%

Current Spot Rates (9.30am) 24th June 2011
	USD	EUR	AUD	CAD	CHF	DKK	NOK	SEK	ZAR	JPY
GBP	1.5956	1.1208	1.5154	1.5645	1.3367	8.3608	8.7308	10.29	10.89	128.451
USD		1.4227	0.9497	0.9805	0.8377	5.2399	5.4718	6.45	6.83	80.503
EUR	0.7029		1.3521	1.3959	1.1926	7.4597	7.7898	9.18	9.72	114.607

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.