QROPS update 27th January 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).

The headline of yesterday was that sterling gained against the US dollar as the release of the latest Bank of England minutes showed that there are now two members of the Monetary Policy Committee favouring an increase in interest rates.

Sterling picked up throughout the afternoon to a high of €1.1628.

This pushed the UK currency higher against the UK to $1.5850, although the rally is likely to be short-lived since Tuesday’s dismal GDP figures show that Mervyn King, Governor of the Bank of England, was probably correct in leaving monetary policy at its current loose level. There may be others on the committee that, at the time, sympathised with the views of Sentance and Weale but the vote was cast at the start of the month before the poor figures were released. Their opinions may now have changed and next months voting could potentially move back to 8-1 or even 9-0.

Some of the gains in sterling could be attributed to a bounce back effect of Tuesday’s steep falls, with the markets settling down after sterling dropped by more than 1% against the US dollar in a matter of minutes. If sentiment turns negative about the prospects for the UK, then GBP/USD may drop as investors shift away from sterling and back towards the dollar. The dollar itself maintained a relatively soft tone and moved lower against the euro, after US President Barack Obama in his State of the Union address called for a five-year spending freeze in federal expenditures and sent Treasury yields lower.

The single currency rose to its highest level against the dollar at $1.3723 earlier in the session, benefiting mainly form a softer dollar tone and dipped only briefly after a German bond auction generated weaker-than-expected demand and after data showed that European banks increased their borrowing from the European Central Bank.

"There is scope for the euro to go higher against the dollar to around $1.40, before people get exhausted," said a currency strategist at Credit Agricole in London. "There are no obvious banana skins out there for the euro, mainly because everyone has stopped talking about the debt crisis".

In today’s market data we focus on the German CPI figures which are expected to fall to -0.4% from a previous 1%, if this is the case it should as the euro’s largest economy affect its recent strength in the markets. UK CBI reported sales and US pending home sales due to drop from 3.5% to 1%. The main focus for the week will be tomorrows US GDP figures which is expected to go from 2.6% to 3.5%, a figure that will undoubtedly have an effect on the market.

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.