QROPS update 6th June 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 fell to a 4 week low against the Euro on Friday, as Greece looked
positive in regards to a new bailout deal. Greece said the European
Union's and International Monetary Fund's inspection of the country had
concluded on a positive note, raising expectations of an interim solution to
the Greek debt crisis.
Back in May GBP/EUR traded above 1.15 as the possibility of Greece
defaulting on their previous loan seemed inevitable, as the IMF vowed not
to bail out Greece again. However a decision made in the G8 meeting just
over a week ago, has meant that bailout funds will be available for Greece.
The new bailout package for the single currency member has put huge
investment into the Euro over the past 10 days, and this coupled with the
news that an uneven UK economic recovery is likely to keep interest rates
at record lows, has seen the Euro gain around 2% in the past week alone,
and finished trading at €1.1209 against the pound.
Investors expect the Euro strength to continue as investors shift focus to
favourable interest rate differentials ahead of a European Central Bank
policy decision next Thursday. The Bank of England is also meeting but it
is widely expected to keep rates at record lows of 0.5%. Investors
had trimmed expectations of a hike as the euro zone crisis escalated in
the last three weeks. But rising prospects of an interim deal for Greece
have supported bets the European Central Bank will raise rates in July.
We expect euro/sterling to rise to 90 pence and even 91 pence as it
becomes clearer that a solution for Greece could be in the offing at the
weekend," said the head of FX strategy at ING. "Euro zone
money market rates are correcting and that should be supportive of the
In contrast, market pricing based on overnight indexed swaps show a rate
hike by the Bank of England is not anticipated until the first quarter of
UK data on Friday showed Services PMI fell to 53.8 in May, down from 54.3
in April and below the 54.1 consensus figure. The figure rounded out a
week of largely dismal data on the UK economy, which have fuelled the
view that a sluggish recovery will keep UK interest rates low for months to
come. One Bank of England policymaker even suggested the need for a fresh round of
quantitative easing this week.
Sterling did hold its ground against the dollar as U.S jobs growth slowed in
May. The pound traded as low as $1.6285, but recovered back to around
$1.6363. Still, the pound is likely to draw some solace from the fact that
economic data in the United States is turning out to be far worse than that
IN THE UK
· Sterling fell to 4 week low €1.1209 on Friday
· Investors worry that an uneven UK economic recovery will keep interest rates at
0.5% until 2012
· Recent UK data has been poor, Services PMI on Friday saw a fall from 54.3 in April to
53.8 in May
· The UK's data even though dismal, is still showing better results than that of the US
and the GBPUSD traded up to $1.6363
· UK spending cuts make it into the media again over the weekend, a selection leading
economists have said in an open letter to the Chancellor that the UK economy is too
fragile for the cuts he has made, however in the Telegraph this morning 50
economists have backed his plans.
· US dollar weakens on Friday afternoon and over the weekend after poor US
employment figures. EURUSD moved to a high of $1.4658 as the unemployment rate
rises to 9.1% and Non-Farm Payrolls came in at disappointing 54k, when some
analysts were expected a figure just below 200k.
· Euro was Friday’s biggest gainer as EU reiterates their intentions to prepare a new
bailout plan for Greece by the end of June, easing worries and concerns on the
Eurozone debt crisis.
· Wall Street Journal suggests that up to €30bn of the new bailout plan could come
from Private Sector investors
· Australian Interest rate decision meeting overnight, rates expected to hold but
markets will be looking for clues on next move
· Eyes move to Thursday Eurozone rate decision, the majority of experts are expecting
policy to remain unchanged but will we hear the “strong vigilance” comments,
suggesting a rise in July?
DATA TO LOOK OUT FOR
· This morning the key data release is the Eurozone Producer Price Index, the figure is
expected to rise to 0.8% for the month and a rise would usually be helpful for the
euro however the annual figure is expected to fall to 6.6%. Depending on how far off
consensus each figure is will depend on how the markets interpret data and how it
effects the call for interest rate rises.
· Canada Ivey Purchasing Managing Index for May is released at 3.00pm and is
expected to rise slightly to 60, this could have a bullish effect on the CAD
· US Treasury’s Tim Geithner speaks today at 6.15pm, the recent decision not to
increase the government debt limit will be one of the key issues mentioned.
Current Spot Rates (9.30am)
6th June 2011
USD EUR AUD CAD CHF DKK NOK SEK ZAR JPY
GBP 1.6419 1.1228 1.5282 1.6109 1.3708 8.3706 8.7825 10.10 10.33 131.660
USD 1.4628 0.9308 0.9811 0.8349 5.0981 5.3490 6.15 6.29 80.188
EUR 0.6836 1.3611 1.4347 1.2209 7.4551 7.8220 9.00 9.20 117.260
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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