QROPS update 17th May 2013 Pension drawdown and QROPS & 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).

UK

Sterling was heading towards six-week lows against the US dollar yesterday as investors sold the pound on concerns that a deepening recession in the euro zone would be a drag on the British economy. GBPUSD touched a low of 1.5197 in morning trade however weakened off above 1.53 towards the afternoon.

GBP may continue to track higher ahead of the Bank of England (BoE) minutes due out on 22nd May as market participants scale back bets for more quantitative easing. Overnight the weakness continued and this morning GBP/USD opened at 1.5236.

The Bank of England raised its growth forecasts on Wednesday, but Governor Mervyn King said there were challenges ahead given the problems in the euro zone. Separate data showed the euro zone economy had shrunk for a sixth straight quarter. GBPEUR traded within a fairly tight range with the low at 1.1814 and the high peaked at 1.1872.

As the BoE raises its growth forecast for the U.K., we may see a growing number of central bank officials adopt a more negative approach for monetary policy, and the board may slowly move away from its easing cycle in the second-half of the year as they see a modest and sustainable recovery in Britain. This year, trade-weighted sterling has fallen 3.5% and recent data shows this has helped the UK manufacturing sector, with exports looking up.

WORLDWIDE

The Euro bounced back from an overnight low of 1.2846 vs the US dollar as the monetary union posted a record trade surplus of €18.7bn in March, but the rebound in the single currency may be short-lived as European policy makers maintain a back stance approach in addressing the risks surrounding the region.

EU Commission President Jose Manuel Barroso took a shot at Germany and said Europe’s largest economy must contribute to the rebalancing of the euro-area as the EU struggles to make progress on the banking union. EURUSD touched 1.2930 from a low of 1.2846. France, which was shown to have plunged back into recession on Wednesday, represents 19.6% of eurozone GDP and 14.4% of European Union GDP. Its share of the European Central Bank’s capital is 14.2%.

The US dollar fell from an almost four-year high versus the yen after weaker than forecast reports on U.S. unemployment claims, housing and inflation dampened bets the Federal Reserve will slow its bond purchases. The cost of living in the U.S. fell in April for a second month, the first back-to-back declines in inflation since late 2008, as fuel prices retreated. The consumer-price index decreased 0.4 percent, the biggest decrease since December 2008.

The Swedish Krona gained versus almost of its major peers after Prime Minister Fredrik Reinfeldt said the country needs policies that will keep interest rates low and curtail damage caused by a surging currency. It climbed 0.3% to 8.576.

South Africa’s rand slid to a four-year low, extending its longest losing streak in 12 months, on concern that falling metals prices and labor unrest threaten the nation’s credit rating and economic growth. GBPZAR traded as low as 14.06 and weakened more than 1% to touch 14.289.

INTERBANK RATES (09.00 GMT)

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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