QROPS Update 18th August 2011 Pension income drawdown, flexible pensions & foreign exchange QROPS and QNUPS

IN THE <?xml:namespace prefix = st1 />UK

• The Bank of England’s Monetary Policy Committee votes unanimously to hold interest rates at record lows
• One of the MPC’s members, Adam Posen, as usual votes in favour of an increase to the asset purchasing facility; and the potential of further Quantitative Easing remains given the sustained level of inflation
• Average earnings in the UK rise for 2.3% to 2.6%, which both beats the previous month’s and exceed expectations.  This does not account for the increase in unemployed graduate numbers, which is visible through and increase in the UK unemployment count
• Sterling shows a highly reactionary move; with a full cent change over the course of the European sessions.  GBP moved from 1.1350 to 1.1450 over the course of the afternoon, despite European decision makers showing unity over the route the EU must take to reform its financial and debt policies

ELSEWHERE

• Consumer prices in general came through on par for the Eurozone, however the core price index did should a fractional drop below the expected 1.7% increase
• The majority of focus was on the notion of Eurobonds and their uses in controlling the contagion affect across the Eurozone.  Whilst EUR/USD traded within a relatively narrow range (1.43809 – 1.4452) the market remains uncertain, and the ban on short selling has done to curb the drop off broadly across the European exchanges.
• The USD dropped considerably against sterling to reach a floor at 1.65536, prompting the view that risk had returned slightly to the market place, and that the UK was still the market of choice for credit and debt derivate contracts
• Although the CHF lost ground against GBP, it has been conclude that the SNB has been unsuccessful in curbing its significant strengthening, and there was no talk whatsoever of a currency peg, which had been on the cards earlier in the week

DATA TO LOOK OUT FOR

• US core CPI and unemployment figures should give a more detailed figure of the scale and effects of inflation on the US grass roots economy
• US existing homes sales are expected to exceed 4.77M forecast to reach a predicted 4.91M level
• A level figures released in the UK will reveal the effects of the secondary education uptake for the year to come, as more applicants and fewer places, coupled with a tuition fee increase may see an increase in the number of unemployed young people entering the market