QROPS update 21st December 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).

The Bank of England voted unanimously to keep rates on hold earlier this month, but they have not ruled out the possibility of further quantitative easing.  GBP improved against both USD and EUR yesterday and into the early hours of this morning (against EUR it was not by much, but sterling it determined to entrench itself in the new rate of 1.1850 and above).  Given the correlation between GBP, USD and EUR I believe that improvement against the greenback signals something of an increase in marginal risk appetite, and from that we may see a fractional loss on GBP/EUR…or rather, had the BoE not come out to assure the market it would release emergency funds to protect UK banks, I would have expected a slight lessening of aggression from the pound.

IN THE UK

• UK Chancellor George Osborne cuts UK growth forecasts for the next four years and says borrowing costs will rise by £111bn, as he warned the Eurozone could drag the UK into recession The pound pushed to a week high €1.1723 from the day low €1.1613 as the euro was sold off.
• Sterling holds firm against the US dollar as most of the bearish news from George Osborne’s statement has already been factored in, this helped sterling hit a one week high of $1.5655 on Tuesday
• Osborne also warns that Britain faces two years extra years of austerity as he sought to shore up his deficit-reduction plans, intensifying a conflict with unions that will stage a mass walkout.  
• Fitch warns that more shocks from the UK would seriously test its triple A credit rating. The top tier credit rating has been supporting healthy demand for UK Gilts; a downgrade would have serious implication for government debt management, reverse the UK’s recent safe haven status and place the pound under extreme pressure.    

ELSEWHERE

• Eurozone finance ministers agree ways to boost the strength of Europe’s bailout fund and have raised the possibility on the IMF getting more resources in order to help Eurozone countries that have been struggling to raise funds.
• The US dollar falls across the board yesterday as commodity currencies continued to rise amid improved risk appetite helped by a surprise rise in consumer confidence.  
• Following a five-hour meeting, ministers also agreed to release the €8 billion Greece needs to avoid bankruptcy and took the first steps to approve the next €8.5 billion tranche of Ireland's bailout
• The Australian and New Zealand dollar continued to rally in London trading, the AUDUSD rose above parity to reach $1.0021, a rise of 1.3%, the New Zealand dollar rose 1.1% to $0.7627
• The euro found support against the US dollar on Tuesday as the Italian bond auction goes well, selling €7.5bn debt at auction, though its costs reached euro area highs, EUR/USD has hit a high so far this morning of 1.3358
• The SEK and NOK gains sharply against the Euro, the SEK was helped by a massive export led 1.6% rise in Q3 GDP, Norwegian GDP growth was also higher in Q3.
• This morning German Unemployment falls dramatically by 20k, helping the euro recover some of yesterday’s losses against the pound.  

DATA TO LOOK OUT FOR (all times GMT)

• Eurozone Employment Rate is released at 10.00am and forecast to show no change from last month at 10.2%
• Eurozone Core CPI data is also released at 10.00am, last month figure showed inflation was at 1.2%.
• US ADP employment for November is due out this afternoon and is expected to come in at 131k, beating last month figure of 110k.
• US Non-Farm Productivity is release at 1.30pm along with Q3 Canadian GDP.
• The Fed’s Beige Book is released at 7.00pm and will give a very clear picture of US economic conditions. There have been some positive data releases in the US recently so if the results carry a more optimistic tone, risk appetite could be helped overnight.

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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