QROPS update 22nd March 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).

Sterling hit a two week high vs. the US dollar yesterday and was set to test a one year high above $1.6344 its highest level since Jan 2010.

With UK inflation data due out today, we could see sterling strength if the reading is poor. With the possibility of a UK rate hike being pushed back later in the year over the past couple of weeks a poor UK inflation reading could see the chances of a rate hike brought forward again and that would almost certainly lead to sterling strength.

UK annual CPI, due today, is expected to rise to 4.2% in February, from 4.0% in January and more than double the Bank of England's target.

Sterling also gained a little against the euro yesterday retracing some recent losses.

Sterling pushed the euro back 0.2% to €1.1473, a short distance from a four and a half month high for the euro of €1.1416 hit following a positive move to increase the European bailout fund late last week.

The euro has support above its 100-week moving average around 1.1528 pence.

Technical analysts said a break above Friday's high could see it target the 2010 high of 1.1185 pence, but stiff resistance was seen ahead of 1.11.

The UK interest rate announcement has been driving sterling strength and weakness of late, firstly with the possibility of a rate hike in the first half of the year driving sterling strength swiftly followed by a change of stance with sterling losing ground as the possibility of a rate hike was moved into the second half of the year.

Some analysts still believe that we may see a rate hike as early as May, however the consensus opinion now seems to be that August is the most likely month. Don’t be surprised to see opinion change again over the coming week with UK inflation due today, Bank of England minutes due on Wednesday, where a hawkish tone could be seen as an earlier rate hike, as well as the budget to contend with.

IN THE UK

• Markets await UK CPI data today, if inflation continues to rise the debate over interest rates will start again and help sterling
• Sterling pushed higher against the US dollar testing a one year high of $1.6344
• Sterling holds on against the Euro reversing recent loses to reach €1.1473
• UK markets await BoE minutes and Osborne’s Budget later in the week. 

ELSEWHERE

• Concerns surrounding Japan ease as further G7 intervention seems unlikely following the nuclear crisis stabilising.
• The US dollar weakens against a basket of currencies as markets revert to risk on.
• UN Nations now have full control over Libyan airspace after recent attacks
• Oil continues to move higher. London and New York stock exchanges post gains after Nikkei moves up 4.4%
• US announced it was to sell $142bn of Mortgage Backed Securities acquired during financial crisis
• The euro still strong after expectations of a rate hike were brought forward, pushes through $1.43 this morning. 

DATA TO LOOK OUT FOR

• This morning UK CPI is released and expected to rise to 4.2%, the pound would see gains despite rising prices
• UK Public Sector Net Borrowing and Retail Price Index will also provide important UK economic data
• Retail Sales data released in Canada at 12.30pm followed by Leading Indicators
• US Treasury’s Geithner address speaks at press conference at 12.30pm  

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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