QROPS update 6th December 2012 Pension Drawdown and QROPS & QNUP

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).

UK

Yesterday George Osborne told parliament that the spending cuts and tax hikes needed to stabilise and then reduce government debt will continue until 2018, three years later than he had planned. That admission was prompted by new forecasts, which expects economic growth to be weaker in coming years.

Fitch has warned that the UK’s triple-A credit rating is at risk as George Osborne fails to hit his deficit reduction targets. The UK’s inability to meet public debt targets ‘weakens the creditability’ of its AAA status according to the ratings agency after yesterday’s Autumn Statement from chancellor George Osborne. The loss of the AAA status would mean that the UK’s sovereign debt, or gilts, would be perceived as more risky by investors and could impact the bond market.

UK PMI services fell yesterday, on the release of this data we saw GBPUSD fall slightly from above the 1.61’s to post a low of 1.6092 however sterling gathered strength shortly after posting figures back up to 1.6114. Cable spent the majority of the day trading within a tight trading range of 37pips falling short of breaking resistance at 1.6130 and support at 1.60.

An unaffected sterling held its ground and moved GBPEUR from prices of circa 1.2275’s to above the 1.23 figure posting a high of 1.2327 ahead of the Autumn statement made by George Osbourne at 12.30pm. Look for strong resistance on the pair around 1.2325, which if broken and held opens the way up to 1.24.

Midday today, sees the release of the Interest Rate decision by the MPC and any further QE decisions; although nothing has been forecast to be released any votes for further QE to be added or any votes for interest rate cuts/hikes will create some volatility.

WORLDWIDE

Despite the failure in reaching a final agreement on a joint banking supervisor Tuesday we saw EURUSD post above 1.31 early yesterday morning. No high tier data was released from the Eurozone yesterday, but the Euro failed to hold above 1.31 as the Spanish bond auction missed target. EUR/USD should be well supported in the mid 1.30s today provided that the ECB refrains from any change in policy.

The Spanish bond auction was expected to post a target of €4.5 bn yesterday, however it fell quite short posting a commitment of €4.25 bn, couple this with weak medium tier data from the retail sector that was released helped keep EURUSD below 1.31.

With ECB Interest Rate decision due at 12.45pm and no change to be made the market will be paying particular attention to the rhetoric that follows, however with no change expected and the Greek aid decision not until next Thursday, this Euro relief rally is likely to fall short without a serious driver behind it.

Yesterday, the US ISM's non-manufacturing purchasing managers' index unexpectedly edged up to 54.7 last month from 54.2 in October. Factory Orders increased 0.8% to $477.58 bn, the third increase in four months, the Commerce Department said Wednesday.

US ADP Non-Farm missed expectations yesterday posting a reading of 118k against a forecast 129k; this is not market moving data generally but an important barometer for Friday’s official Non-Farm figures.

India's services output grew at its slowest pace in 13 months in November, but stayed strong because of an increase in orders, a survey showed Wednesday. The Index is compiled by Markit and HSBC and was posted at 52.1 in November, lower than October's 53.8.

Poland's central bank Wednesday cut interest rates for a second straight month by 0.25 of a percentage point after the economy slowed much more than expected in the third quarter.

Australia's unemployment rate fell unexpectedly in November as more jobs were added to the economy, even as policymakers warned a mining investment boom that has powered growth will soon peak. The surprisingly upbeat report sent the Australian dollar higher to US$1.0480 from US$1.0442 as some traders pared back bets interest rates will fall again early next year.

INTERBANK RATES (09.00 GMT)

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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