Foreign Exchange Report QROPS

Better news for expats based in Eurozone regarding currency exchange from sterling to euros but careful planning still should be at the forefront of peoples mind. Things are still volatile and we are in unique territory.  In conjunction with investment returns, currency exchange continues to concern many expats with UK Pensions and QROPS.  

Continuing our daily look at factors affecting currencies allows 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.

Sterling continued its recent run of losses against the dollar yesterday as it fell to a 14 month low of $1.4239, we have seen sterling fall by more then 11 percent against the dollar since the start of the year making it the worst performing major currency.

Markets are still being driven by the weak euro as further news was released showing

Germany have banned any naked short-selling of some securities such as government bonds, some stocks and selling on credit protection backed by sovereign debt. It seems the ban will do little to rectify the euro zone debt crisis and with concerns that stricter financial regulation could weigh heavily on the financial sectors performance, economic growth and risk appetite the euros position continues to look bleak.

Sterling hit a day high of €1.1771 before it fell by one percent against a recovering euro in the afternoon session to the day low of €1.1634. The euro jumped to a session high against the dollar during the day after trader talk revealed Greece is considering to leave the European Union obviously these are just rumours at this stage but they have caused concern for investors.

A major concern for the pound at the moment is the lack of risk appetite in the market, in a risk-averse environment sterling will remain under pressure. The current data highlights the fiscal woes for the euro which is now also evident for sterling.

With many economists believing the Bank of England will hold interest rates at the current record low for some time yet the pound has lost its appeal with investors. All eyes are now looking to how the new coalition government will tackle the UK’s current fiscal deficit and hopefully accelerate the pace of fiscal tightening. Finance Minister George Osborne will deliver his emergency budget next month to outline how they plan to reduce

£6 billion pounds in spending cuts this year.

The Bank of England released their minutes from their May the 7th meeting it showed the

MPC said the pace of UK fiscal consolidation may need to be tougher then implied in the

March budget to reassure markets. The MPC voted unanimously to make no changes to its ultra loose policy stance this month, these comments weighed heavily on the pound.

Elsewhere in the US lower than expected consumer price index data did little to weaken

the dollar the year on year figure came in at 2.2% down from the previous figure of 2.3%

Data released today includes retail sale both month on month and year on year in the UK. Jobless claims and Philadelphia Fed Manufacturing Survey are due in the US. In the Eurozone, Germany will release Producer Price Index.

Gerard Associates Ltd advises expats and people considering living abroad on the options available for Pensions, QROPS 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 reassurance and security of UK authorised and regulated advice.