QROPS update 29th July 2011 Pension income drawdown & 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 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).

Euro selling dominated the day’s trading. Rumours seem to say that the ECB may step in and

buy peripheral debt, and that this signifies a rate hike to come, but it seems to be a far more

risk on sentiment which saw EUR loose over a cent against both GBP and USD. During the

early part of the European session we saw earning data released, which was later

complimented by figures coming through from the US. 24% of companies released in the UK

achieve above their expectations, which makes for a disappointing series of releases

generally.

The market seems to be looking for those currency pairs that are supported in both risk

selling and dollar selling. These have emerged also as currencies that are perhaps higher

quality, and the Swiss Franc and Japanese Yen have come in to favour.

In the US, the majority of traders are preparing to forecast and mitigate the effects of

compromise. US Treasuries are not presently held in the same safe haven regard they

enjoyed prior to the recent deficit discussions.

Washington still finds itself in a debt stalemate as 2nd of August approaches and that has

seen USD hold above the 1.63 rate against GBP. Despite the impressive increase in US

pending homes sales last month (8.2%) and the better than expected figure for this month, it

would seem that job creation is still the key issue that is driving Democratic objections to a

reduction in government spending. Weekly job claims have fallen below the 400k mark,

which is encouraging (even if it is only slightly), especially considering they have spent the

last 15 weeks above this level.

The pound did hold above the 1.1380 mark for the majority of the day, but it is clear that the

market is bracing itself for an increase in volatility over the coming days as the US Senate

draw nearer to crunch time.

IN THE UK

• The CBI’s realised sales figures came through well below expectations, posting -5.  This was in distinct contrast to the 1.0 that analysts had forecast and reiterates the poor level of confidence, reflected in activity on the high street.
• The poorer UK preliminary GDP figures suggest the likelihood of the BoE will increase rates this year diminishing. A poll conducted by Reuters shows that the probability of a hike in 2011 is down, and is compounded by a rise in probability of a further round of Quantitative Easing.
• The Footsie drops following a deluge of company results published early.
• Sterling enjoyed an initial rally from 1.1357 (a price which has characterized trading for much of July) to 1.14 on the interbank market.
• This morning UK mortgage approvals rise to 48k.

ELSEWHERE

• US Lawmakers postpone debt ceiling vote last night, apparently delayed by Boehner because he felt the vote would not be passed. It looks as if regardless of outcome the vote, it would now pass to Senate who have indicated they will not pass the bill.
• German unemployment figures were not as bad as expected.  Forecasters expected a -15k, but instead came out at -11k.
• Moody’s downgrade 6 Spanish regions.
• Credit Suisse announce increased redundancies in the face of a distinct drop off in profits.  CS have already has 2 rounds of redundancies this year, and associates have suggested that anyone would be ‘silly’ if they thought they were 100% safe.
• Weekly job claims in the US finally fall below 400k, only just thought, after 15 weeks above.
• US pending home sales published at 2.4%.  This better than the negative 1.5% that was forecast for.
• GBP/USD holds above 1.63 at the start of trading on Wall Street; however the green back has strengthened against EUR, moving from 1.44 to 1.4252.

DATA TO LOOK OUT FOR

• Key releases to look out for will be concerning the US debt talks, the deadline is only 4 days away now.
• US GDP for Q2 is released at 1.30pm and expected to fall to 1.6% from 1.9%
• Canadian GDP is also released 1.30 but is expected to limited growth of 0.1% from last quarters flat 0.0%
• US personal Consumption figures are released this afternoon, consensus is for a drop to 1.0% from 2.2% showing the US consumer is keeping a tight hold on their purse strings,  this is bad news for the economy and manufacturing.

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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