QROPS update 16th August 2011 Pension income drawdown & 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 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).

Sterling made gains against a broadly weaker dollar yesterday reaching session highs of

$1.6409 from the earlier morning low of $1.6255, after a run of weak US manufacturing data

battered the dollar. On-going concerns over the UK economic recovery could cap these gains

overall. The dollar also fell over 1.5% against a stronger euro which was also up against the

pound.

The euros gains were led by a jump in the Swiss franc over speculation Switzerland’s central

bank may announce further measures to stem the Franc’s strength.

The pound fell from the morning high of €1.1418 to trade near the session low of €1.1324.

Investors will now await the results of the barrage of UK data which is due this week, which

includes retail sales and unemployment figures, some expectations are to show a fall in high

street sales whilst the job market still struggles. Whilst these figures may come in lower then

needed analysts believe the UK outlook is not as bleak as the euro zones which may support

sterling against the euro this week.

"Even if the data this week is fairly poor, and euro/ sterling tries to grind higher, it may be a

case of utilising any rally to sell euro/sterling at better levels," said a currency

analyst at CIBC Markets.

Sterling has been resilient in recent weeks during heavy market volatility as investors

overlooked weak economic data in favour of the perceived safety provided by the UK's AAA

credit rating, which has boosted the UK gilt market in the past few months.

But the pound's vulnerability was underlined by comments from Bank of England

policymaker David Miles, who was quoted yesterday as saying the economic recovery for the

UK was "fragile" and it was possible that more stimuli from quantitative easing might be

necessary at some point.

Following on from these comments investors will be closely watching the Bank of England

minutes released on Wednesday to see if any other policy members joined Adam Posen in

his vote for further quantitative easing.

IN THE UK

• The pound reaches a session high of $1.6409 against a broadly weaker dollar.
• Bank of England policy member David Miles is quoted as saying the UK economic recovery was still ‘fragile’ and it was possible that more stimulus from QE may be necessary at some point.
• Investors will now watch the Bank of England minutes released on Wednesday to see if any other policy members joined Adam Posen in voting for further QE.
• This morning the pound falls against the dollar as short term speculative accounts are sold ahead of UK inflation data.

ELSEWHERE

• The dollar weakens after manufacturing data falls to -7.72 against expectations of 0.80.
• The euro gains across the board after it was led by a jump in the Swiss franc over speculation Switzerland’s central bank may announce further measures to stem the Francs strength.
• S&P come under fire after their downgrade of the US, American have proven since to be world beaters undermining S&P’s mathematical assumptions.
• The euro gains over 1.5% against the dollar reaching a session high of 1.4476 up from 1.4263.
• The Aussie Dollar falls overnight as the minutes from the central bank’s policy meeting show the chances increase of an Australian interest rate cut as a result of the recent global turmoil
• Fears in the SNB continue this morning as the Swiss Franc starts to appreciate again seeing gains of 1.3% yesterday, Swiss ministers and bankers meet to discuss drastic action.
• This morning German GDP data falls to a disappointing 0.1% against a consensus figure of 0.5%. The German economy is the linchpin in the Eurozone and signs of the German economy stalling will worry many investors, the resulting news weakens the euro this morning,

DATA TO LOOK OUT FOR

• A busy day for UK data starts with DCLG House Price Index at 9:30am which is expected to show a rise to 0.9% from the previous release of -1.6%.
• Also at 9.30 all the various inflation components are released, Retail price Index, Consumer Price Index and Core Consumer Price Index, perhaps the key figure here is CPI which is expected to rise to 4.2% from 4.3% last month. Inflation is hotly tipped to touch 5% in the near term future before falling back down. A rise in inflation today will relight the argument to raise in interest rates in the UIK and could subsequently help the pound.
• 10.00am sees Eurozone preliminary GDP figures for Q2, 0.3% is the expected figure.
• The US also has a busy day with, Housing Starts, Building Permits, Capacity Utilization and most importantly at 2.15pm Industrial Production.
• New Zealand Producer Price Index is released at 11.45pm and input and output are expected to fall.

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.

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