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).

Weak consumer confidence figures, along with an increase in house prices and a dovish tone from Bank of England’s Posen saw Sterling on the back foot, yet again.

Earlier on in the exchanges, sterling had risen against a broadly weaker euro, as the

Ireland’s central bank put on a $34bn tag on bailing out Anglo Irish Bank under aworst case scenario.

We also had data from Nationwide showing rising house prices, contrary to the expectations of a third consecutive fall month on month, which supported the pound.

However, the pound was flirting with a four month low hit against the euro on Wednesday, as uncertainty about the economy and a possible fresh infusion of cash was talked about.

Bank of England’s Adam Posen, again reiterated that he had not decided on his vote towards further monetary easing, making the pound suffer, putting him in opposition to Andrew Sentence, who is in favour of rate hikes.

At the same time, we saw consumer confidence weaken more than expected in September. A Bank of England survey showed British lenders were expected to supply a broadly similar amount of credit in the last three months of 2010 as in the current quarter and expect default rates to fall.

The euro loos like it may have further room to gain against the pound given the pair broke below the 200-day moving average around €1.1648.

The euro fell against the dollar and yen yesterday, hurt by Ireland’s bail out scenario and also as investors booked profits ahead of month and quarter-end.

Traders also took some profit on the euro, after it hit a five month high versus the greenback on Wednesday and ahead of Fridays US Manufacturing data.

At 11.50am, the euro was up 0.1% against the dollar at $1.3635, having earlier pushed through an option barrier of $1.3650 to hit a five month high of $1.3676 on the EBS trading platform. There has been almost a 12% rise versus the dollar over the course of this quarter.

Fellow euro zone debtor, Spain, also lost a notch on its credit rating, being downgraded from AAA to AA1. Its government, unbowed by Wednesday’s general strike, unveiled details of tough austerity measures in their 2011 budget with much reduced borrowing in a drive to boost market confidence.

The Spanish downgrade was widely anticipated after similar moves by Standard & Poor’s and Fitch and investors were relieved that Moody’s said the outlook now looked stable.

Germany saw its unemployment level fall to its lowest level in more than 18 years in September. The jobless rate was 7.5% compared to 20% in Spain.

Thursday also saw the dollar struggling against the yen, amidst the growing fears of more Federal Reserve easing. The yen rose broadly on the last day of Japan’s fiscal half-year. Traders cited sporadic dollar selling against the yen by Japanese exporters, stop-loss selling and dollar selling by hedge funds.

This pushed the dollar just shy of its lowest level against the yen since Japan stepped in to curb yen gains two weeks ago, heightening expectations that they may well do so again.

US stocks did rise on Thursday as a sharp fall in weekly claims for jobless benefits and early signs of strength in September business activity, lifted economic confidence.

New US claims for unemployment benefits fell by 16,000 last week to 453,000. The Labour Department said, which was much steeper than had been expected and a sign the labour market may be strengthening modestly.

This was also backed up by stronger readings for regional business activity indexes in NYC and the US Midwest, seen as early indicators before national surveys on Friday and later next week.

The S&P 500 has gained more than 9% so far this month, supported by signs of economic stabilization and hopes the Federal Reserve will take extra steps to speed up the recovery. This strong data also helped give another boost for equities.

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.

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