QROPS update 15th November 2011 Pension drawdown & 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 income drawdown, flexible pensions or QROPS (Qualifying Recognised Overseas Pension Scheme) should be considered to maximise the Pension drawdown, 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, income drawdown now including flexible pensions, a QROPS and QNUPS (Qualifying non UK Pension schemes).

IN THE UK

• UK Consumer Price Index figures are released today ahead of the MPC’s inflation report. Some analysts are forecasting a 0.2% drop in CPI inflation to 5% and a “considerably weaker outlook for growth and inflation” than in August. Thus raising concerns of an extension to the QE asset purchase program.
• GBP/EUR traded with a day’s low of 1.1622 and high 1.1685. The pair had begun to suffer toward the start of the Italian bond auction but news of the record yields brought about a jump back to 1.1673.
• GBP/USD hit its peak before the European session reaching 1.6072 just after 7am, the pair then gradually slid down to the day’s low of 1.5856.
• Mayor of London, Boris Johnson has publically attacked the Euro and called for its dissolution thereby breaking away from the UK Conservatives. 

ELSEWHERE

• EUR/USD saw significant movement yesterday. Day’s high of 1.3722 and low of 1.3593. The pair is likely to maintain this trend as uncertainty in Europe continues and indeed grows.
• Angela Merkel has addressed the Christian Democratic Union yesterday and stated in no uncertain terms that “Europe faces its most difficult hour since World War II”. Meanwhile her party voted for a scheme to allow countries to leave the Euro – something which is outlawed by its memorandum.
• Spain has joined Italy and Greece with bonds yielding over the 6% threshold which has in the past triggered panic and rescue funding – this is a strong sign of the build-up of contagion.
• An auction of €3bn Italian 5 year bonds saw yields hit a Euro-era high of 6.29% following in the steps of the 10 year bonds which reached their equivalent record last week and approached 7.5%.
• Italian “mega-bank” Unicredit revealed shocking figures yesterday, including a €10.64bn loss in the past year. Deeply concerning not least for its status as one of 29 systemically important global banks.
• Mr Samara, leader of the Greek opposition party has agreed to join the interim Government but refuses to agree to any further austerity. The country is now one month from bankruptcy.
• JPY, CAD, AUD and USD all showing strength as major safe haven currencies, a clear demonstration of the market’s diminished risk appetite. Leadership changes in Italy and Greece have not quelled anxiety as hoped.
• US Fed further quantitative easing 

DATA TO LOOK OUT FOR (all times GMT)

• A busy day for data starts today in the UK with inflation data at 9.30am. Retail Price Index and Consumer Price Index figures are released for October. Inflation is expected to have cooled slightly which won’t help the pound whilst the talk of quantitative easing is still doing the rounds.
• DCLG House Price Index figures are also released at 9.30am and will give an accurate picture of the UK housing market.
• At 10.00am in Europe, the collective and individual nation’s ZEW surveys are released for Economic Sentiment and Current Situation ratio. If high figures are released the euro will be supported but low figures will suggest that the outlook is not so bright and put additional pressure on the euro.
• Eurozone preliminary GDP figures for the 3^rd quarter are released at 10.00am and expected to remain at 0.2%. Any surprises here will have big impact on the euro.
• Eurozone Trade Balance figures follow and wrap up the European data and are expected to show a slight decline to €-1.3B
• Moving to the US, Producer Price Index in its various formats along with Retail Sales is released at 1.30. A mixed bag of results is expected so it’s difficult to predict how the dollar will perform this afternoon.
• Canadian Motor Shipments and New Car Sales is released at 1.30pm, Car Sales is expected to show a healthy rise to 1.9%
• US Business Inventories at 3.00pm ends what could become a volatile trading day and expected to post a slight fall to 0.2% from 0.5% last month

Gerard Associates Ltd advises UK residents, expats and people considering living abroad on the technical and currency options available for Pensions, pension income drawdown, flexible 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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