QROPS update 10th June 2011 Pension Foreign exchange QROPS and QNUPS
At Gerard Associates Ltd we continue our daily look at factors affecting markets and currencies allowing some insight into conditions affecting exchange rates.
Cash and income timing from a UK Pension or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension, QROPS and investment income taken.
Investment market volatility and currency exchange remains a challenge. The global economics are volatile and unprecedented in history. Currency exchange continues to concern expats with UK Pensions, QROPS and now QNUPS (Qualifying non UK Pension schemes).
IN THE UK
• UK Trade balance narrows in April to £7.389 billion, lower than a forecast of £7.55
• The Bank of England unsurprisingly leaves interest rates at record low of 0.5%.
Markets now not expecting a rate rise until at least the end of the year
• Inflation looking to peak around 5% later this year, as oil prices increase and
raise utility bills
• Sterling rebounds from a one-month low against the euro to hit a high of €1.1303
• European Central Bank holds rates at 1.25% although door open for a further rise in
• In Trichet’s post interest rate decision speech, he mentioned “strong vigilance is
warranted”, signalling a rate hike in July
• The ECB president overrides concerns in the peripheral countries and focuses mainly
on economic data from Germany, but will focus to Greece’s debt problems now that
the ECB meeting is out the way.
• US Trade deficit shrinks sharply in April, being adjusted to $43.7 billion from $46.8
billion in March. Market consensus was for a rise to $48.7 billion
• The report also reflect disruptions from Japan’s March 11 tsunami and earthquake
• Japan consumer mood improves in May, recovering from a record fall the previous
month, supported by the efforts to mend damage caused by the March disaster and
recovery in factory production
DATA TO LOOK OUT FOR
• There is a variety of UK data released at 9.30am, Industrial Production,
Manufacturing Production and the Producer Price Indexes. None of the figures are
expected to be particularly inspiring so there is likely to be limited sterling movement
unless we see any surprises.
• At 12.00pm Canadian Unemployment Rate and Change in Employment figures are
published, the figures are key indicators of labour conditions in Canada and can
swing the markets, rate is expected to stay at 7.6%.
• US Import and Export Price Index figures are released at 1.30
• In The UK at 3.00p NIESR GDP Estimate is released, the figures provide a good
indication of what the next quarter’s GDP is likely to look like and can influence UK
• 6.00pm US Monthly Budget Statement is expected to show a significant fall to $-
Current Spot Rates (9.30am)
10th June 2011
USD EUR AUD CAD CHF DKK NOK SEK ZAR JPY
GBP 1.6274 1.1254 1.5348 1.5871 1.3712 8.3951 8.8587 10.22 110.20 130.356
USD 1.4461 0.9431 0.9752 0.8426 5.1586 5.4435 6.28 67.72 80.101
EUR 0.6915 1.3638 1.4103 1.2184 7.4597 7.8716 9.08 97.92 115.831
A busy day yesterday, with a rich vein of data, starting with the UK’s Trade balance,
released early in the morning, which showed a narrowing in the trade deficit in April,
helping Sterling rebound against the Dollar and Euro. The gap showed it had
narrowed to 7.389 billion pounds in April from 7.708 billion in March, lower than
expectations for a deficit of 7.55 billion pounds. The Office for National Statistics
compiled the data with the breakdown showing a sharp fall in imports of consumer
goods, while exports held steady.
The findings suggest the rebalancing of Britain’s economy away from consumption is
continuing, although it raises doubts about how much exports will contribute to a
fragile economic recovery. The government was relying on exports to boost the
sluggish economy. However, strong growth in exports was contrasted in a huge
decline in household spending and business investment leaving overall first quarter
gross domestic product growth at just 0.5%.
Next up, was the Bank of England interest rate decision, which caused no surprise as
rates were left at a record low of 0.5%, which had been priced into the markets
before the decision came out.
The European Central Bank also had its interest rate decision shortly after ours and
as widely expected, left its main lending rate at 1.25%, but the main focus was
on the president’s post-decision press conference. Many were expecting the ECB to
signal that it would raise rates in July after tightening monetary policy for the first time
since the eruption of the financial crisis at its May meeting.
He said recent economic data from Germany in particular would appear to justify a
rate rise next month, overriding concerns about the fiscal health of countries on the
periphery of the Eurozone. But after a knee-jerk rally after Mr Trichet’s comments,
the single currency gave back its gains.
Jean-Claude had said with the ECB meeting out of the way, the market’s focus would
return to Greece’s debt problems.
In the US, the trade deficit showed as shrinking sharply in April amid record exports
and a drop in imports as the economy struggled with a weak recovery. The
Commerce Department reported the trade deficit in goods and services fell to a
seasonally adjusted $43.7 billion from $46.8 billion in March, This was the smallest
gap in the year to date. This surprised analysts as the consensus estimate was for a
rise to $48.7 billion. US exports rose 1.3% in April to a record $175.6billion, led
by exports of industrial supplies and materials, capital goods, consumer goods and
travel services, the department said.
Higher oil prices continued to weigh on the US trade balance, although to a lesser
extent. The April trade report also reflected the supply disruptions from Japan’s
March 11 earthquake-tsunami disaster, with imported automobiles and auto parts
tumbling 12.9% from the prior month. Those from Japan fell by more than a
half from March.
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 Pension including QROPS and QNUPS and investments in a clear format allowing all customers to make an informed choice.
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