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?
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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.

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