Pound Loses Ground Against Euro As Sterling Hits Low

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 lost ground against the euro on Friday after stronger than expected German and
French growth data bolstered the single currency, whilst sterling continued to hover near the three week low against the dollar.

Sterling moved from the session high of €1.145 to hit the low of €1.1361, against the dollar
the pound fell from the day’s high of $1.6308 to end the day’s trading near the low of $1.6183.

The strong data out of Germany and France (the two biggest economies in the euro zone) ...
... raised expectations that the European central bank will raise rates again before the Bank of England will; this is even though there are on-going concerns over the euro zone peripheral debt. Markets have priced in a further rate hike for the euro zone in July whilst the UK have now fully priced a rate hike at the end of the year.

Sterling had gained against the euro earlier this week reaching €1.1530 as interest rate differentials between the UK and the euro zone narrowed after euro zone peripheral worries overtook market sentiment and some investors interpreted the Bank of England's inflation
report as hawkish.

The recent poor data from the UK continued after industrial output came out a lot weaker then expected on Thursday and the National Institute of Economic and social research said economic growth in the UK slowed to 0.3% in the three months to April from 0.5% in the
three months to March.

The pound has lost ground against the dollar this week after a steep sell off in commodity prices prompted investors to rush towards the relative safe haven of the dollar and the yen.

IN THE UK
• The pound falls against the euro on Friday morning after stronger than expected German and French growth data.
• Sterling hovers near a 3 week low of $1.6183 as investors move to the safe haven currencies of the dollar and yen.
• Late on Friday during the US session, the pound makes gains against a struggling euro, breaking the €1.15 showing a 1.5 cent swing from low and high of the day.

ELSEWHERE
• On Friday morning, data shows the collective Eurozone GDP grew by 0.8% in Q1 of 2011.
• GDP figure is mainly down to Germany’s 1.5% growth and France’s 1.0%.
• However it highlighted the struggling countries such as Italy which only grew by 0.1% and Spain which grew by only 0.3%.
• The release also showed Portugal sliding back into recession after contracting for a 2nd consecutive quarter.
• Over the weekend, IMF head Strauss-Kahn is charged with attempted rape.
• This morning the euro falls to a 6 week low against the dollar of $1.4050 as concerns mount that Greece will have to restructure its debt and EU Finance ministers are meeting in Brussels today to discuss additional bailout funds for Greece, Germany demand deeper budget cuts
• US consumer prices rose in April by 0.4% slightly below the previous month’s release.

DATA TO LOOK OUT FOR
• At 10am the Eurozone releases Consumer Price Index for April. The CPI could help the euro following on from Friday’s GDP data. CPI remaining high would heighten the argument to raise interest rates again.
• Also released at 10.00am is Eurozone Trade Balance, the positive balance is expected to narrow slightly to €1.7B.
• 1.30pm the US release Empire State Manufacturing for May, this looks at the state of manufacturing in New York, generally a high figure helps the US dollar, but this month’s figure is expected to drop to 21.3 from 21.7 last month
• At 2pm the Fed’s Ben Bernanke speaks.

Gerard Associates Ltd advises expats and people considering living abroad on the technical and currencyoptions 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.