QROPS update 30th 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).

UK GDP came out marginally better with a reading for the fourth quarter of 2010 up -0.5%

compared to -0.6% giving sterling a slight lift against the US dollar up to a daily high of

$1.6042. The Office for National Statistics, accounted the higher GDP figure to a rise in

output industries such as manufacturing and mining in the UK. However trade deficit reports

and a generally weak economic outlook compared to Germany and US means interest rates

are looking a lot less likely. Due to the fact the fragile economy may not cope with a hike in

rates. Two more members of the MPC will be discussing the UK economy and their outlook

concerning interest rates. Spencer Dale a hawkish member, spoke last week and said he

voted for “nasty” rate hikes and was unsure if the economy could handle it. Weale another

hawkish member of the MPC said he believes the Bank of England should be concerned with

the risk of higher inflation.

The euro continues to hold its strong position against both the US dollar and sterling. This is

quite surprising considering the flood of bad data in recent weeks; resignation of Portugal’s

prime minister, the lack of progress with the Irish debt situation and the downgrading of

peripheral banks. However the euro is still trading on speculation that interest rates will be

hiked up in the near term.

In the US, the dollar continues its gains and pushed sterling down to $1.5942 before trading

quite flat in the European afternoon trading session at the $1.597 level, the support level of

$1.593 still remains quite strong with possibly some investors still hopeful of a near term

interest rate rise from the UK. Against the Euro it also gained but as consumer confidence

was reported at a figure of 63.4 compared to an expected 66.0, the greenback lost some

early gains in the afternoon. The EUR/USD is expected to remain quite range bound for the

time being as the dollar is favouring some recent good news yet cannot break below the

$1.40 mark.

In today’s news we begin with EU consumer confidence expected to fall slightly from -10.6

to -10. The Swiss leading indicator is expected out at 2.16, possibly halting the Francs recent

run. US ADP employment figures expected with a small drop from 217k to 205K, finally UK

Gfk Consumer confidence also expected to fall from-28 to -30, possibly adding more

pressure on the already struggling sterling.

IN THE UK

• UK GDP came out marginally better at -0.5% compared to -0.6% pushing cable up to a high of $1.6042.
• Sterling still struggles as the economy remains under pressure and falls to a low of €1.1317 against the euro.
• Hawkish MPC member Weale believes the bank should focus on the concern of risky high inflation in his afternoon speech yesterday 

ELSEWHERE

• Euro is surprising resilient and continues to hold strong as investors remain focused on the idea of a rise in interest rates in April.
• US Consumer confidence fell to 63.4 compared to an expected 66 and saw the greenback lose earlier gains.
• Ratings agency S&P downgrade Portugal by 1 notch to BBB- and kept their outlook as negative.
• Australian dollar hits a new all-time high against the US dollar, breaking the $1.03 mark
• US Pending Home Sales surprised to the upside helping risky assets followed by a rise in 2.65% in Japan’s stock market
• After comments by Fed’s Fisher and Bullard, US looks to be following Europe, heading to monetary policy normalisation  

DATA TO LOOK OUT FOR

• EU consumer confidence expected to fall slightly from -10.6 to -10.
• At 11.00 CBI Distributive Trades Survey is released and will reveal short term trends in UK retail and wholesale sectors.
• US ADP Employment Change figures released at 1.15pm, a small drop from 217k to 205K is expected.
• MPC member Paul Fisher speaks today at Manchester conference
• Overnight, the UK Gfk Consumer confidence is expected to drop to -30 and could affect sterling tomorrow morning. 

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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