QROPS update 8th August 2011 Pension income drawdown, flexible pensions & 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 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).

Improved U.S. jobs numbers gave world stocks some relief in an eighth straight session of

losses on Friday which had wiped almost $2.5 trillion off values on the week and brought

back memories of the 2008 crisis. The U.S. Labour Department said payrolls increased

117,000 and the unemployment rate dipped to 9.1% from 9.2% in June. A

Reuters survey ahead of the report showed expectations for a rise of 85,000 with the

unemployment rate at 9.2%.

There remained widespread demand for policymakers to beef up plans to tackle the

Eurozone's crisis and prevent the U.S. economy in particular from sliding back into recession.

Global equities were down 1% on the day for a more than 8% loss this week.

Emerging market shares stumbled 3% on the day.

Apart from signs that the U.S. and global economy are weakening -- despite record low

interest rates and the pumping of liquidity into the system -- the focus was clearly on

Europe, where bond yields in Spain and Italy have been blowing out, threatening the same

kind of refinancing problems that have already smitten Greece, Ireland and Portugal.

The European Central Bank disappointed investors on Thursday by buying Irish and

Portuguese bonds but not Italian or Spanish. Italy has emerged as the market's major

concern after a rescue deal that was intended to stop the spread of the crisis failed to

convince investors it had the firepower to ease pressure on the vast Italian bond market.

The Swiss franc -- which the Swiss central bank has tried to weaken this week -- hovered

near record highs against the euro and dollar, while the yen rose. Both are considered safe

haven currencies. The franc rose to a record high against the euro of 1.0710 francs in early

Asian trade but retreated to 1.0863 in European dealing on fears of official action to weaken

the currency.

Sterling hovered near a two-month high against the euro on Friday at 1.1537, supported by

concerns that the Eurozone's debt problems may overwhelm two of its larger economies.

Sterling was also up 0.2% on the day at $1.6297, finding its footing after falling 1.0% the previous day when the dollar rallied broadly on the back of intervention by Japanese authorities to sell the yen.

Analysts said sterling could come under selling pressure next week if the Bank of England cuts its growth

forecast in its quarterly inflation report, which some said could call sterling's recent

perception as a "safe-haven" currency into question

Gold held firm on Friday after upbeat U.S labour market data soothed immediate fears of a

recession, but longer-term uncertainty about economic growth and concerns about the euro

zone debt crisis supported demand for the precious metal.

Spot gold was bid at $1,658.79 a troy ounce by 1322 GMT, from $1,647,90 an ounce late in

New York on Thursday when it hit a record high of $1,681.67. A weak dollar makes gold

cheaper for holders of other currencies and with few other places to go, the metal still looks

attractive to those investors trying to maintain the value of their capital.

IN THE UK

• FTSE 100 slumps to worst week in nearly three years on growth woes
• Sterling hovered near a two month high against the euro on Friday, supported by concerns that the Eurozone’s debt problems may overwhelm two of its larger economies.
• RBS shares shed 6.9% after the part-nationalised lender posted a pre-tax loss of £678mn pounds in the second quarter.
• Sterling was up 0.2% against the dollar on Friday at $1.6297, finding its footing after falling 1.0% the previous day when the dollar rallied broadly on the back of intervention by Japanese authorities to sell the yen.
• Data from mortgage lender Halifax showed UK house prices rose in July, but also indicated that the housing market was unlikely to improve further through the end of the year.
• Analysts said sterling could come under selling pressure this week if the Bank of England cuts its growth forecast in its quarterly inflation report.

ELSEWHERE

• European shares open lower continuing their two week slide after S&P cut the US prized AAA credit rating by one notch.
• Nikkei slides over 2% on US downgrade
• On Friday US jobs data beats expectation but growth woes linger
• Over the weekend The European Central Bank steps in to buy Spanish and Italian debt bonds, this morning that has seen the spread between Spanish/Italian and German Bond yields drop by over 100 bps showing the intervention is working thus far. 7% is seen as the critical level and currently Spain and Italy seen theirs back in the late 4/early 5’s.
• The US dollar struggles this morning after the weekend’s decision by Standard and Poor’s to drop the US’s credit rating. The move had been warned and many felt it came as no surprise but this morning EUR/USD has broken $1.44 again and GBP/USD sits near 2 month highs.
• US treasury’s Tim Geithner hits out at S&P saying the decision showed “stunning lack of knowledge of US fiscal budget math' and terrible judgement
• Gold hits the lofty heights of 1716, demand for the higher yielding currencies continues to fall, GBPUSD now up at 1.58 (10 cents in a week) and NZD is dropping too

DATA TO LOOK OUT FOR

• Pretty quiet day in terms of data releases today includes Sentix Investor Confidence in the Eurozone, a fall is expected as conditions dry up amidst the recent down turn in activity and debt problems.
• UK RICS Housing price balance (Jul) released tonight, expected consensus -25 slightly better than the previously released -27
• Japan Money Supply M2+CD (YoY) (Jul) consensus view 2.9%
• BOJ Monetary Policy Meeting Minutes
• No data from the US today although the US will remain in the spotlight after S&P announcement over the weekend. Keep an eye out for any news from the other ratings agencies and tomorrow’s Fed meeting.

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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