QROPS Update 10th May 2011 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 started Monday’s trading down on the euro overnight high after UK house prices for

April revealed the biggest fall in the past 1 ½ years, this was followed by the Confederation

of British Industry lowering its economic growth estimates for the UK.

Speculation now mounts that the Bank of England may downgrade its growth forecasts on

Wednesday as the Bank of England’s quarterly inflation report is released, this will increase expectations

that the UK will not make a rate hike over the coming months. Recent softer than expected

UK data over the past few weeks may suggest the bank may be more downbeat on their

assessment of the economy’s growth.

March’s UK inflation report unexpectedly eased to 4% after 5 months of acceleration to a

more than two year high of 4.4% in February.

The pound struggled against the dollar as it fell to a 3 week low mainly following falls the

euro sustained against the greenback as a downgrade of Greece’s debt made concerns

increase over the euro zone debt woes. Greece’s credit rating was cut to B from BB- by

Standard & Poor with possibility of further reductions down the line. Greece is now currently

the lowest rated country in Europe.

Sterling reached a day’s high of €1.1427 against the euro after the earlier session low of

€1.1339. Against the dollar the pound reached a high of $1.6406 before falling to the session

low of $1.6269

The euro gained some support in the morning after Germany reported a jump in exports

which increased the case for higher interest rates in the euro zone.

IN THE UK

• Sterling reaches a session high of €1.1439 against the euro but falls to a 3 week low against the dollar of $1.6269
• Halifax survey shows UK house prices fall in April by the biggest amount in the last 1 ½ years.
• The Confederation of British Industry lowers its economic growth estimates for the UK.
• Speculation is the BoE will follow suit and revise their growth forecasts downwards tomorrow.
• On a brighter note, BRC Retail Sales rose by 5.2%, helped by the recent bank holidays 

ELSEWHERE

• Standard & Poor cut Greece’s credit rating to B from BB- with further risks of reductions down the line.
• EUR/USD drops to lows of $1.4270 after Greece’s downgrade.
• ECB members says possibly restructuring of Greek debt could bring banking system to its knees
• Germany shows a jump in exports for last month which may increase the case for another rise to euro zone interest rates.
• Recent USD gains against euro are seen more as corrections to oversold USD and changing sentiment on the euro. US unemployment and loose policy will continue to hamper USD.
• Euro long positions (transactions selling euros) rose to €18.4bn last week, the highest in 4 years and explains recent euro weakness.
• US Government debt is fast approaching its staggering predetermined limit of $14.3 trillion, USD under pressure as reserve currency.
• IMF say NZD could be overvalued by as much as 20% 

DATA TO LOOK OUT FOR

• Today there are no data releases or policy speeches scheduled for the UK.
• US Import Prices are released at 1.30pm and are expected to rise creating more inflationary pressures. 

 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.