QROPS update 31st May 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 hovered near a two-week high against a broadly weaker dollar on Friday as investors

liquidated long positions in the greenback, with the pound set to benefit from an

increasingly uncertain outlook for the U.S. economy.

US data on Friday confirmed a weakening economic trend. U.S. consumer spending rose less

than expected in April as high gasoline prices continued to squeeze household budgets.

Pending sales of existing U.S. homes also dropped more than expected in April, touching a

seven-month low.

"It's generally a weak dollar story today and if weak dollar dynamics carry on through this

year, GBP/USD can be drawn higher despite the fact that UK fundamentals remain poor,"

said a senior currency strategist at Rabobank.

"Cable should hit the important $1.65 level next week and that will establish a bullish trend

which could see it rise to $1.6750," said a currency strategist at FXCM. "If it

does not break $1.65, then we will see it fall towards $1.60."

Sterling slipped back from a two-month high against the euro of €1.1613, hit on Thursday

when concerns over Greece's debt crisis knocked the single currency lower, sterling's

capacity to sustain any gains would depend on UK economic data.

British consumer morale rose unexpectedly in May to its highest level this year, a survey by

researchers GfK NOP showed on Friday.

Nationwide housing data was also better than analysts had forecast. But Friday's economic

data is unlikely to ease concerns about the UK economy in the face of rising inflation and

fiscal cuts, which have led markets to price out an interest rate rise until at least the

beginning of 2012. Analysts said data showing fundamental weakness in the UK economy

could quell demand for sterling.

The manufacturing sector purchasing managers' index (PMI) will be released on June 1,

while services sector PMI data will be released on June 3. The manufacturing sector PMI is

expected to show a soft reading and a worse than expected number could weigh.

"A sharp slowdown in the manufacturing sector in May's PMI manufacturing survey would

reinforce the subdued growth outlook," Bank of Tokyo Mitsubishi said in a note.

IN THE UK

• Sterling hovered near a 2 week high against a broadly weaker dollar over the uncertain outlook for the US economy
• Consumer confidence unexpectedly rose in May to its highest level in a year.
• Nationwide house prices rose to 0.3% in May from -0.2% previously.
• In a related survey, Nationwide forecast that house prices will rise 16% over the next 4 years and most young people in the UK do not feel they will be in a position to buy their first property in the next 5 years,

ELSEWHERE

• US dollar finishes week on the back foot as investors remain concerned about US recovery, GBPUSD now back over $1.65 and EURUSD just broken $1.44
• Over the long weekend, markets traded fairly thinly but investors remain cautious about whether or not Greece will receive its next tranche of aid from the IMF and EU.
• However, the mood has changed this morning as markets are in risk appetite mode following a report in the US press that said Germany is considering dropping its drive for an early restructuring of Greek debt to help facilitate a new package of loans.
• Credit ratings agency Moodys place Japan’s Government rating on review for possible downgrade.
• Strong business confidence figures released in New Zealand strengthen the NZD and eyes move to this evening’s interest rate decision. New Zealand is struggling with its overvalued dollar, and any signs of a rise in rates may lead to further NZD strength.

DATA TO LOOK OUT FOR

• This morning Eurozone Consumer Price Index and Unemployment Rate are released, both carry a fair degree of significance so could provoke some euro volatility.
• 2.00pm sees the release of the Bank of Canada’s interest rate decision, investors are expecting rates to be left unchanged at 1.0%
• In the US at 2.45 Chicago Purchasing Manager’s Index is released, the figures form a useful tool to see trends in business activity across the US, this month’s figure is expected to fall to 63.0 from 67.6 as the recovery remains tough
• US Consumer Confidence is forecast to show a slight rise at 3.00pm to 66.0 and could help the US dollar later this afternoon.

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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