13th August 2010 Pension Foreign Exchange Report QROPS & QNUPS

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 fell to its weakest in nearly two weeks against the dollar on Thursday, which coincided with the recent losses of the euro due to weak eurozone data. Weak unemployment and gross domestic product data out of Greece, as well as a decline in eurozone industrial production triggered fears of the strength of the recovery in Europe.

Elsewhere the US dollar gained significantly as investors got out of riskier currencies to seek a safe haven in the dollar. "Sterling took something of a breather against the dollar this morning as people were thinking the move had already gone a long way but it was just a brief pause and if euro/dollar is trading lower, then the risk is that sterling will too," said a currency strategist at ING.

At 12.19 the pound fell to its weakest point against the dollar since 30th July to bottom out at 1.5565. Wednesday saw a drop of 1.4%, which was Sterling’s biggest daily drop since mid-May, which caused it to tumble from the magical 1.60 mark reached last Friday.

The Euro was indeed the worst performer this week on concern that if global recovery slows, the situation in Eurozone will be worse due to the austerity measures to cut fiscal deficits. In the monthly report released yesterday, ECB said that "sustainability of the recovery in global and euro-area trade will depend critically not only on a further strengthening of private demand, but also on the robustness and health of the global financial system." Meanwhile, Eurozone banks are facing "manageable" risks to replace the 1.3 trillion euros of debt finance that's due next three and a half years.

EUR/USD’s continued to fall from the highs of 1.3330 last week and hit a fresh low at 1.2779 yesterday, not managing to break the key support level of 1.2731. This was again caused by investors seeking a safe haven, thus selling the riskier Euro heavily in favour of the dollar.

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.