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 rose on Tuesday as data showed UK manufacturing activity grew last month at its fastest pace in 16 years, extending earlier gains made on purchases by Asian sovereigns and talk of buying related to a dividend pay-out.

The Market/CIPS manufacturing Purchasing Managers’ Index (PMI) rose to 58.3 in

December, its highest since September 1994. The headline figure was above the consensus forecast of 57.0 and November’s downwardly revised reading of 57.5.

“The PMI numbers are a very positive surprise which shows that the manufacturing sector is still going great guns and not showing any visible signs of disruption by the snow over the month,” said an economist at Investec.

By 1430 GMT, the pound was 0.8% higher at $ 1.5612 after rising as far as $ 1.5646. Gains accelerated as the pair broke solidly above $ 1.5600, traders said.

Sterling got a lift earlier on buying from Asian sovereign accounts, macro funds and on talk of a UK clearer’s dividend payment which required it to buy pounds to pay investors. There was also talk a supranational entity was buying sterling/Swiss franc, which supported the UK unit.

The euro hit an intraday low against the pound at euro1.1680, coming off a seven-week high of euro1.1567 last week. Support was seen at the 55-day moving average of euro1.1689.

“We believe EUR/GBP is too high at these levels as the UK austerity drive seems to be on course,” said strategist at RBS. He forecast the Euro would be trading around euro1.25 in six months’ time.

Other data on Tuesday was mixed as UK mortgage approvals rose unexpectedly in November while consumer credit declined and money supply growth was flat.

Data from the Commodity Futures Trading Commission on Monday showed currency speculators had decreased their bets against the pound in the week ended Dec. 21.

Views are very mixed regarding Sterling’s performance going into 2011, however one thing for certain is the volatility seen over recent times will still be present.

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.