QROPS update. 20th October 2010 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).
Yesterday saw yet another volatile day of trading with GBP/USD moving across a 2 ½ cent range. The dollars initial strength came from U.S. Treasury Secretary Timothy Geithner’s announcement that the U.S. would not engage in dollar devaluation and needed to work hard to preserve confidence in a strong dollar.
Sterling fell around 0.4% early on to $1.5835, well below Friday’s 8 ½ month high $1.6108. At 11am a CBI Industrial Trends Survey showing a guide to exports and outputs showed a decline to -28, way below the -19 consensus figure, this added pressure to sterling causing a fall to below $1.58, as Investors saw these figures as ‘concerning’ for the UK economic outlook.
Most investor eyes are fixed on today’s Bank of England minutes which are announced at 0930am.
The key information from the minutes will be the indication to how the voting for additional Quantitative Easing went.
Market players expect the Bank of England to show a three-way split, with policymaker Adam
Posen voting for more QE, which would act as a counterbalance to policymaker Andrew Sentance, who has voted for a rate increase since June.
Sterling could strengthen if the minutes show a better scenario than a 3 way split.
"The risk is on the downside for sterling," said currency strategist at RBC Capital Markets. "The market will look to whether the budget cuts are credible."
The dollar furthered gains across the board later that day as risk aversion saw investors head back into the dollar, as currencies such as the Euro and Aussie Dollar were sold off. The risk aversion came from a shock 25 basis point interest rate increase in China, which investors fear could lead to a setback in Chinas global growth and could slow Chinas vast demand for commodities.
The interest rate increase is also seen as a potential precautionary measure for vast inflation figures in the imminent future.
After the rate increase the Euro plummeted from as high as $1.4003 to as low as $1.3767, the Euro also lost ground against the pound moving from €1.1325 to €1.1412. Sterling however, lost further ground moving as low as $1.5695 but finished UK trading back above $1.57.
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.
This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.