QROPS update 11th February 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).

There were no real surprises sprung by the Bank of England, as interest rates were left on hold at 0.5%. The markets had priced in a 20% chance of a rate hike, partly due to minutes from recent policy meetings stating that Martin Weale and Andrew Sentence voted in favour of raising rates.

This was further supported by the expectation that annual inflation will continue to rise, building on its eight month high of 3.7% in December which was double the target earmarked by the central bank. Analysts claim that in order to prevent further disappointments in this area, more members could lean towards the sentiment currently shared by Weale and Sentence.

Looking ahead, a rate hike is being realistically priced in for May whilst rates based on swaps rates show a 22% chance of an increase in March. The markets reacted to this information with a late GBP/USD rally that helped to erase the 0.5% fall throughout the day. Additional data released in the morning neither supported nor harmed the pound, as industrial production rose as expected by 0.5% in December and manufacturing production fell to 4.4% from an expected 5.4% year on year.

The US dollar enjoyed higher trading levels this morning as it was bolstered by better than expected data from the States and risk aversion. For the first time in two years, Jobless claims fell below 400,000 and due to the fact that unemployment has been a recent sore point with the Federal Reserve, the news was welcomed. The figure was the best reported since June 2008 and sentiment was further helped by a drop in continuing claims (3.88 million from 3.935 million).

The news didn’t sway Ben Bernanke‘s opinion with regards to the idea of additional asset purchases but this could all change if positive numbers continue to emerge from this sector. Before a change in policy direction, The Fed Chairman will look to an improvement in job growth as American companies continue to shy away from hiring. Risk appetite arrived in the form of possible additional tension in the Middle East, as an unsubstantiated rumour of the possible death of King Abdullah from Saudi Arabia emerged.

Weak data from Australia and the UK only contributed to the markets sway in favour of risk aversion.

In the morning’s trading session, Sterling made some solid ground against the single currency as traders fully expect the Bank of England to be the first central bank of the major western economies to raise rates. This went some way to gain back the ground lost against the euro earlier in the week off the back of the announcement over the tax levy against banks.

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.

This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.