QROPS update 16th 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

• Sterling fell below the critical 1.5850 support level against the dollar, reaching a low of 1.5798 as the UK inflation slowed more than expected giving the Bank of England reason to continue their dovish stance on monetary policy.
• Bank of England governor Mervyn King remains insistent that inflation will drop aggressively, the CPI reading of 5% is still well beyond the government’s 2% target, as it has been for the previous 22 months, leading the governor to write yet another inflation letter to George Osborne explaining why Inflation is still above target.
• The pound remains under pressure this morning as figures show the Employment Rate in the UK has risen to 8.3% above the consensus. Reports earlier in the month suggest that business leaders feel unemployment figures are likely to get worse before they start to improve.

ELSEWHERE

• EU president Herman van Rompuy yesterday urged Eurozone governments ‘to do more’ in ordering their own houses, asserting that the euro-area has the ‘means’ to escape the current crisis.
• Positive sentiment from a new Italian government has worn off. Perhaps a smooth government handover could have invigorated investor confidence, for the moment Mario Monti seems to be working against a gradient.
• Italian and Spanish bond yields continue to suffer with the Italy’s 10 year return once again surpassing the ominous 7% threshold, where the cost of borrowing essentially increases faster than a region can sustain repayments.
• Q3 GDP data from Europe served to divide market sentiment as France and Germany appear to have staved off the dreaded contagion, for now at least, with respective growth of 0.4% and 0.5% but the figures leave France desperately short of their growth target for 2011.
• The aggregate decline in Eurozone confidence saw EUR/USD close the European session over a cent down from the same time on Monday at $1.3623.
• Market rumours have emerged suggesting that the ECB intervened in the bond market to purchase Italian debt and the governing council may have little option but to expand its monetary policy as the region braces for a ‘mild recession.’
• Credit Suisse data shows the markets believe there is a 62% chance of a further 25bps cut interest rates from the ECB in December. Speculation on future policy could subsequently weigh on the exchange rate as investors consider the impact of future policy.
• Risk aversion played a strong role in Tuesday’s trading but a rally for equities suggested a sharp turn in sentiment for the second half of the day after the dollar was boosted by a tranche of positive data from the states, including better than expected data retail sales. The dollar carried an advance until this morning when risk aversion seemed to resurface.

DATA TO LOOK OUT FOR (all times GMT)

• In the UK this morning at 10.30am the Bank of England releases the Quarterly Inflation Report  The consensus seems to be that King will maintain the central bank’s dovish tone regarding monetary policy and the outlook for growth will be considerably weaker
• Main data today in the US is release of Consumer Price Index at 1.30pm; this will provide information on US inflation and give the markets a heads up on future US monetary policy.
• US Industrial Production is published at 2.15pm with some predictions expecting a solid 0.4% growth given complications in Japanese led supply-disruptions spurring an increase in US output 

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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