QROPS update 17th June 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).

Thursday saw the UK post worse than expected Retail Sales data, releasing a backwards

looking figure of -1.4% against an expected figure of -0.5% for the month of May. This

extremely poor figure disappointed the markets and cancelled out previous month April’s

better than expected figure of 1.1%.The data itself is a primary gauge of consumer spending,

which accounts for 70% of our GDP figure which on its last reading remained in-line at 0.5%.

This poor reading of data has yet again allowed speculation within the market, regarding a

UK interest rate hike, there is a strong argument because of the recent poor UK data being

released that the dovish stance will continue to rein, in the MPC.

With no further UK data released for the remainder of this week, the market will monitor

releases from our counterparts and will await next week’s trading session and the high

impact data expected in the form of Public Sector Borrowing, MPC Meeting Minutes and

Inflation Report Hearing.

In the EU the Greek debt story continued to rear its ugly head following a leak of a memo

from an official who was present at yesterday’s EU Commissioners meeting held in Brussels.

The official reported that the German policy-makers where ready to allow Greece to default

on its current debt commitments and this would then in turn call into question the viability

of the ECB itself.

Meanwhile Greek Prime Minister Papandreou is to reshuffle his cabinet and to seek a

confidence vote by Tuesday next week, in an attempt to battle a shrinking minority and push

through austerity measures, to aid their fiscal situation. It is likely that uncertainty regarding

Greece’s future is likely to remain until next week’s Ecofin meeting and even then officials

may try to postpone further.

Across the pond, in the US we saw the USD strengthen in the mornings trading session

hitting a low of GBP/USD 1.6076 and a low of EUR/USD 1.4027, as we saw the fears of the

Greek debt take a stronger hold on the market and investors placed aside their woes of the

USD losing its safe haven status and pile further funds into the reserve.

At 15.00GMT we saw the Philly Fed Manufacturing Index released from the US and we saw a

figure of -7.7 posted against an expected figure of 7.1. This was the worst figure posted since

July 2009.

This data is important due to it's a leading indicator of economic health, the data is a survey

of about 250 manufacturers in the Philadelphia Federal Reserve district which asks

respondents to rate the relative level of general business conditions. A figure below 0.0

signals worsening conditions and above signals improving conditions.

A keen eye will be toward the University of Michigan’s preliminary consumer confidence

figure posted at 2.55pm this afternoon.

IN THE UK

• GBP/EUR posts new high of €1.1462 in the early hours of Thursday morning, but falls after as poor retail figures are released.
• GBP/USD falls to $1.6076 during yesterday’s morning trading session, but sterling manages to claw back some of its losses.
• No further UK data to be released this week.
• Market focuses on next week’s release of MPC meeting minutes from the Interest Rate meeting earlier this month.

ELSEWHERE

• Greek debt story continues to play on peoples mind, as official’s memo is leaked.
• Former Fed Chairman Alan Greenspan points out Greece is almost certain to default and that could the US back into recession.
• Germany and France meet today for crisis talks on Greece, EU Finance Ministers meet over the weekend.
• IMF have agreed to pay next tranche of bailout fund to Greece even if no new plan is agreed
• EURUSD rises off this new but is brought back as Juncker says Greece have an extremely difficult path ahead.
• US posts worst Philly Fed Manufacturing data since July 2009.
• US Unemployment Claims beats expectations posting figures of 414k against expected 421k.
• US Building Permits also beats expectations posting figures of 0.61m against expected 0.55m.
• Swiss National Bank keeps rates on hold at 0.25%.
• Melbourne Institute Inflation Expectations is released in line at 3.3% year on year.

DATA TO LOOK OUT FOR

• A quiet day for data releases starts at 10.00am with Eurozone trade balance, the deficit is expected to widen to -€2.7B
• US Michigan Consumer Confidence figure expected at 2.55pm, forecast at 74.2.
• ECB Trichet speaks at 1.00pm.

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.

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