QROPS update 28th November 2012 Pension drawdown and QROPS & 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).

UK

The London markets opened yesterday with GBPEUR at 1.2340. UK growth remaining on par and impressive quarterly Business Investment figures prompted GBPEUR to rise to its highest this week at 1.2407. It has opened today at 1.2385. As mentioned yesterday, GBPEUR was capped at just over 1.24. This remains the case for today unless any surprises emerge.

UK GDP remained at 1.0% despite fears it would be revised downwards, the fly in the ointment is the Bank of England estimate that potentially 90% of the 1.0% rise was attributed to the Olympics and Jubilee celebrations. With these now a fond memory, any growth in the 4th quarter is a serious concern and contraction is a distinct possibility.

Bank of England Governor Mervyn King said Tuesday the central bank should have cut its growth forecasts earlier. The BOE lowered its forecasts for the likely path of growth in the UK economy earlier this month, a move that partly reflected the exclusion of some optimistic scenarios. The decision to appoint Mark Carney as the next BOE Governor has lifted the pound slightly as Carney’s hawkish stance on inflation is likely to result in firm policy.

GBPUSD dropped to an early morning low yesterday of 1.6019 before gaining strength. It reached a high of 1.6056, the highest level since the beginning of November. The pair has fallen this morning and a break below the key psychological support level of 1.6000 is a possibility.

WORLDWIDE

EURUSD traded between a high of 1.2998 and a low of 1.2913 during Tuesday’s trading. Positive consumer confidence figures helped the EURUSD move away from the 1.30 mark it reached on Monday.

US Consumer confidence rose in November to the highest level in more than four years, a sign US household spending will keep growing. The Conference Board’s confidence index climbed to 73.7, the highest since February 2008, from a revised 73.1 reading the prior month. Durable Goods Orders in the US fell to 1.5%, far less than expected yesterday. It was forecast to drop more than 2% on last month’s figure but instead only fell 0.2%

Despite European finance ministers appearing to reach an agreement on Greece, concern still remain about the specific details of the agreement and the conditions that Greece have to meet, part of the uncertainty surrounds a debt buy-back operation. This and a downward revision on global growth forecasts from the OECD has given risk appetite a knock, EURUSD has fallen back down this morning to 1.2915 and a test of the 1.2902 support level is a possibly.

The Organization for Economic Cooperation and Development said yesterday that China's economy is set to re-accelerate briskly in the next two years, while Japan's tepid growth should finally drag it out of deflation even as the government sinks into unprecedented debt levels.

India’s economic growth probably slowed last quarter to match a three-year low as elevated inflation and subdued investment add pressure on Prime Minister Manmohan Singh to extend a recent policy overhaul.

Data released yesterday from South Africa's statistical agency showed widespread strikes in South Africa's mining sector weighed even more heavily on the economy in the third quarter than economists had expected. South Africa's economy grew 1.2% in the third quarter compared with the previous three months of the year. Economists had expected growth of 1.5%.

Poland's government took another step towards relaxing its regulations over the ceiling on public debt by approving the finance ministry's proposals aimed at better protecting it against volatility of the Zloty it was announced yesterday.

Swiss National Bank chairman Thomas Jordan is due to deliver a speech this evening titled "Monetary Policy and Investment Policy of the National Bank in the Sign of the Strength of the Franc" at the Economic Society, in Bern. Volatility is expected, with the GBPCHF currently trading at 1.4905

INTERBANK RATES (09.00 GMT)

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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