QROPS update 2nd August 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.

 UK

• 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).
• Sterling strength continues to be dictated by investor appetite or aversion to risk. Against the euro the pound traded between 1.2751 and 1.2666 yesterday, ending the European session at 1.2675 and more than 1.5% down on mid-July’s highs. Volatility suggests that investors are reluctant to make long term moves, focussing rather on the short term.

• Yesterday morning saw the release of UK manufacturing PMI which missed expectations of 48.6, with 45.4 showing further contraction in the sector and representing a three year low for the Index.
• David Noble, CEO of the Chartered Institute of Purchasing and Supply, explained these disappointing manufacturing figures as the result of ‘A perfect storm of wet weather and weak confidence in the UK’.

• In the UK the BoE is not expected to make changes to the target asset purchase of £375Bn or the Bank rate of 0.50%, meaning we will have to wait until next week’s Inflation Report and press conference for insights into the MPC’s outlook.
• Sterling continued to lose ground over the course of the day as markets price-in what could be the first signs of a coordinated set of measures from the ECB and Fed today. If sentiment on both sides of the Atlantic is considered hollow then we could see greater volatility over the course of the FOMC meeting and after the ECB press conference at 13:30.

• GBP/USD mirrored sterling’s losses against the single currency, beginning the morning at 1.5691 and closing the day at 1.5586. In the lead up to the European open today GBP/USD trades at 1.5553.