QROPS update 29th 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 continued on from Friday by getting a hammering in the markets, falling to multi

months lows of €1.1337 against the euro and $1.5936 against the US dollar. The outlook for

sterling this week is not positive with some disappointing figures expected.

An interesting point by a BNP Paribas researcher gives a clue for the pounds recent downfall

“Sterling's strength witnessed since January has been supported only by "nominal" and not

by "real" yields. Now as the nominal yield support vanishes, sterling has only one way to go,

and that will be down."

The euro continued to hold in the markets on the back of rumours that there will be an

interest rate hike in the near-term. All key indicators point towards this happening in the

next few months, but with the issue of European debt crisis back on the agenda we may see

this altered. In Germany Merkel’s Christian Democratic Union won only 39% of the

votes in Baden-Wuerttemberg, its worst result since 1952. This means Germany could be

faced with a hung parliament. The two opposition parties said they are willing to unite as a

coalition party, any political instability of Europe’s largest nation will affect the euro.

In the US some developments in term of monetary policy appeared on Saturday as Fed

president James Bullard said that a review of the second QE programme might be needed,

given the continued strength in the US economy. Which was further strengthen by reports

of both Pending Home Sales and Personal Expenditure rising. Pending home sales rose from

-2.8% to 2.1% and Personal Expenditure rose to 0.7% compared to previous reports 0f 0.3%.

Both of these reports boosted the Dollar in the market and allowed it to trade at low of

$1.402 against the Euro. Bullard said that it would be reasonable to ‘review QE2 in the

coming meetings... and see if we the Federal Reserve want to decide to finish the

programme or stop a little bit short’. Such comments may be somewhat premature, given

the still uncertain state of the US economy and the on-going global issues in Japan, the

Middle East and the Eurozone, but the talks have been enough to help appreciate the

greenback

The Swiss franc continues to strengthen, with the Yen being intervened with by the G7

nations to depreciate it and the US dollar being sold-off we see the Franc emerge as the safe

haven for investors.

The Canadian Dollar strengthens in the markets as crude oil rises above $103 per barrel, this

is the case with other commodity linked currencies With the CAD strengthening to $1.5594

and the AUD $ 1.5498 against sterling.

In today’s market there is a flood of data released with German CPI figures expected out at

2.1% the same as previously. GDP figures from the UK due at 1.5% worse than previous,

showing the UK economy is still under pressure and finally there is US consumer confidence

which also shows a decline from 70.6 to 66.0.

IN THE UK

• Sterling struggles throughout yesterday’s trading. Falling to a low of $1.5936 against the US dollar.
• It is now believed the Sterling’s recent strength was down to nominal trading due to possibilities of a rate hike.
• Fears of a slowdown in the growth of the UK economy send the pound down to €1.1337 against the euro.
• In the last few minutes, final print of UK 4^th quarter GDP figures stayed at -0.5% against consensus for a fall to -0.6%
• UK mortgage approvals up slightly to 46.97k, little reaction in sterling strength after the releases. 

ELSEWHERE

• Germany Merkel’s Christian Democratic Union won only 39 percent of the votes in Baden-Wuerttemberg, its worst result since 1952
• Canadian Dollar strengthens in the markets as crude oil rises above $103
• Pending home sales rose from -2.8% to 2.1% helping the US dollar to $1.402 against the Euro.
• Personal expenditure in the US rose to 0.7% compared to previous reports 0f 0.3% showing the largest economy may be growing at a healthier rate than anticipated. 

DATA TO LOOK OUT FOR

• German CPI figures expected out at 2.1% the same as previously
• US consumer confidence expected to show a decline from 70.6 to 66.0, but after the recent positive data we could see a surprise.
• Japanese Industrial Production released this evening for Feb; figure is expected to show a fall despite being before earthquake. 

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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