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

billion.

• 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

ELSEWHERE

• European Central Bank holds rates at 1.25% although door open for a further rise in

July

• 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

disaster.

• 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

monetary policy.

• 6.00pm US Monthly Budget Statement is expected to show a significant fall to $-

150.0bn

Current Spot Rates (9.30am)

10^th 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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