IFX Market Report for QROPS

Currency exchange continues to concern many expats with UK Pensions and QROPS. Sterling is strengthening against the €uro bur weakening against the Dollar. The complexity for Pension and QROPS and investment strategies also needs continued monitoring of exchange rates to optimise returns.

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.

It's was a volatile day on Friday for the stock markets and the pound after it was confirmed that the UK has a hung parliament.

The FTSE 100 opened down 1% and the pound dropped to a one-year low against the dollar amid widespread economic and political uncertainty in both the UK and Europe. The index of leading shares later steadied 14.3 points lower at 5247.7.

Early trading saw the pound fall to below $1.45 against the dollar and down to 1.14 euro. It recovered after Liberal Democrat leader Nick Clegg said the party with the most votes and seats - the Conservatives - should have the first attempt at trying to form a government.

With the Tories unable to secure an outright majority in the House of Commons, the lack of a decisive winner will almost certainly hit investor confidence, at least in the short term.

But that is being overshadowed by the growing fears over the eurozone debt crisis, which has already hit markets across Europe - both the German Dax and French CAC 40 joined the FTSE in opening lower this morning.

How will the election affect the markets?

Investors would have been hoping for a decisive winner in the election.

With that now impossible, speculation will immediately begin about potential coalitions between one of the two main parties and the Liberal Democrats in order to secure a parliamentary majority.

A Labour-Lib Dem pact is seen by many as the most likely outcome. However, John Wraith, fixed income strategist at Merrill Lynch, warns that a Lib-Lab coalition could be bad news for the markets.

"If Labour does manage to swing the Lib Dems behind them, that's a coalition which would be horrible for gilts and sterling because you would have a very fragile government which could fall at any time," Wraith is quoted as saying in the Daily Telegraph.

However, former Monetary Policy Committee member David Blanchflower believes a hung parliament might actually be good news for the UK economy as it could prevent early spending cuts, which he believes, would be detrimental to the recovery.

"I do not think there is any evidence that the market thinks a hung parliament is a bad idea," says Blanchflower.

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. This with the reassurance and security of UK authorised and regulated advice.