QROPS update 25th October 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).

IN THE UK  

• Sterling retreated yesterday from the six week high seen against the dollar after the recent increase in risk appetite which has been the driving force in the markets dried up a little after final decisions from the EU summit were delayed until Wednesday’s meeting. Sterling retreated from a new high of $1.6002 settling down to trade around the $1.5950 level.
• With the final decision on the Euro zone expected at tomorrow’s meeting it wouldn't be a surprise to see fundamental data largely ignored by the markets in the run up to the meeting.
• David Cameron and French President Nicolas Sarkozy yesterday argued over the right of non-euro nations to attend the October 26^th European summit, with Sarkozy stating that if the UK wanted to be involved they should have joined the euro.
• Last night the UK parliament rejected the motion of a referendum relating to British involvement in Europe, whilst this was the result Cameron was after the fact there has been a rebellion amongst his party has not done anything to help his position as leader.
• Today’s UK current account data is unlikely to show any signs of the desired ‘rebalancing’ towards external driven growth with consensus at £-9.2B and a previous of £-9.35B.

 ELSEWHERE

• Yesterday data from Europe showed that the manufacturing sector contracted beyond expectations to 47.3 its lowest point since July 2009 from 48.5 previous, while the services sector slipped further to 47.2 from 48.8. These figures show an overall contraction in economic activity adding fuel to the on-going concerns that the euro zone may enter an industrial, if not fully fledged recession from this quarter onwards.
• The euro strengthened slightly against the US dollar and the pound yesterday after a mixed day which was driven by investor sentiment over hopes a concrete plan will be put in place to tackle the euro zones debt crisis.
• EUR/USD gained by 0.54% on the day whilst GBP/EUR mirrored the move closing around €1.1489 from the open price of €1.1520.
• USD/JPY hits fresh record lows with many analysts expecting further downside still to come.
• Typically, over the past few weeks, there has been one trade for the market: risk-on or risk-off. In a 'risk-on' environment, the Australian Dollar and the Euro typically fair better; in a 'risk-off' environment, the Japanese Yen and the U.S. Dollar are typically the best performers. Ahead of the U.S. session on Monday, the commodity currencies were among the best performers versus the U.S. Dollar, while the European currencies, the British Pound, the Euro and the Swiss Franc, were the worst performers.
• Chinese manufacturing grew for the first time in 4 months whilst Japanese export growth slowed in September but still doubled economists’ forecasts.
• NZD lost ground last night by on average 0.5% against its leading counterparts in response to Q3 CPU falling short of expectations. Further drops are likely ahead of Wednesdays RBNZ monetary policy announcement.
• The Canadian dollar has certainly benefited from the stubborn risk-appetite climb; but its performance has clearly lagged its more yield-intense counterparts. With USDCAD hovering just above parity (1.0000), we are met with fundamental conflict. On one side, we have risk trends. And, on the other, we have the Bank of Canada rate decision. The policy authority has maintained a dovish tone. Will they threaten action on this view?
• In Europe today consumer sentiment is likely to show how the on-going uncertainties over the euro area debt crisis are affecting consumer confidence. Germany and Italy are likely to hover around current lows however a slight improvement may be on the cards.
• US consumer sentiment is also expected to improve with consensus for a reading of 47, helped by an improvement in September non-farm payroll.
• European leaders will gather again tomorrow to finalise plans to tackle the euro zone debt problems. We will see if they are split over the mechanism of implementing the European Financial Stability Facility and the role of the European Central Bank. They committed yesterday to announce steps at tomorrow’s summit in order to ease concerns and bring back lost confidence.
• In the meantime Greece has been given the European part of its latest bailout package and is awaiting the tranche from the International Monetary Fund.

DATA TO LOOK OUT FOR (all times UK BST)

• 09:30 UK Current Account.
• 09:45 BoE Governor Mervyn King Speaks.
• 14:00 Bank of Canada interest rate decision where markets expect them to keep rates unchanged at 1.0% and there is a strong chance they may retreat from their implied tightening bias back to a neutral stance.
• 15:00 US Richmond Fed manufacturing with markets expecting a reading of 0 from last month’s -6, US consumer confidence and US housing starts.

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.

This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.