We continue our daily look at factors affecting currencies allowing some insight into market conditions affecting exchange rates. Cash and income timing for UK Pensions and QROPS should be considered to maximise the Pension, QROPS and investment income and benefits taken.

Investment market volatility and currency exchange remains a challenge. Things are still very volatile and we are in unique global influencing territory. In conjunction with investment returns, currency exchange continues to concern many expats with UK Pensions, QROPS and now QNUPS.

Sterling’s gains against the dollar were extended yesterday after Consumer Price Inflation rose to an 8 month high of 3.7%. The increase in CPI was driven by rising oil prices and saw a strong increase on the consensus figure of 3.3%, and biggest ever monthly gain. This increased speculation that interest rates may need to rise soon, possibly in the first half of this year.

“I think it does raise the risk that the Bank of England will have to move interest rates in the first half of this year. We don’t think they’ll move next month because the data has actually been a little bit weaker during the start of this year,” said a UK economist at Deutsche Bank.

Sterling rose around 90 pips immediately after the data to $ 1.6060 its highest since 22nd November.

Against the euro, Sterling made gains from €1.1901 to €1.1973 after the CPI data, however sterling did not sustain its gains falling to as low as €1.1891 in the afternoon.

The main focus will now be on the Bank of England minutes out next week. Traders will be eager to see if yesterday’s CPI figures have encouraged any other Bank of England policymakers to join Andrew Sentance’s hawkish views to increase interest rates, something he has stood by since June 2010.

In other data British consumer confidence rose in December for the first time since August, although worries about jobs and the economic outlook still left it well below its long-term average.

The Nationwide Consumer Confidence index climbed eight points to 53 last month, ending three months of falls and matching October’s figure.

The Royal Institution of Chartered Surveyors’ seasonally adjusted house price balance nudged up to -39 from -44 in November, improving more than the consensus forecast of -42.

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 Pensions, investments, currency exchange and guidance on taxation in most popular ‘sunnier’ climates. This with the re-assurance and security of UK authorised and regulated advice – essential tools for your security.