QROPS update 9th 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).

Although yesterday saw very little Economic Data released, markets remained volatile as

uncertainty and risk based trading dominated trading.

Sterling made gains to €1.1544 against the Euro, pushing close to the 2 month high €1.1554,

but this was put down to Euro weakness as the ECB’s idea to buy back Spanish and Italian

Bonds is deemed by investors to be just a short term solution. Analysts are unsure as to how

long the ECB can go on purchasing bonds to support countries experiencing financial

difficulties.

Many think that the Euro could weaken further as worries over France’s sovereign rating

looks bleak. France are currently looking at insuring their debt, but the recent downgrade

for the US which saw it lose its AAA status has meant that the cost to insure for France has

rose sharply.

Against the Dollar, sterling had a mixed day initially rising to $1.6471, a near 2 month high.

However as the risk aversion kicked in, and investors opted for the ‘still’ safe haven USD, the

pound fell to $1.6298 before recovering to $1.6350 as Stop Losses were triggered around

$1.6310.

The big picture for the US looks bleak at the moment although some of the day to day data

like a drop in unemployment has given some hope across the pond. At 19.15 today the

FOMC meet to discuss interest rates for the first time since their downgrade, and investors

will be looking for any indication of where they feel the economy will head over the next few

months.

Overnight RICS House Price data for July showed a better than expected figure, moving from

-26 in June to -22 in July, consensus was expected at -25.

The main focus for the UK will be on the BoE quarterly inflation report on Wednesday, and

the pound will be under pressure if the BoE cut its growth forecast. The main data for the

UK today is Manufacturing and Industrial Production which has been estimated to fall from

1.8% in May to 0.3% in June.

IN THE UK

• Sterling pushes to a near 2 month high €1.1544 but has a mixed day against the dollar with a range between $1.6298 and $1.6471.
• Quiet day overall for UK data as the pound relied on risk related trading
• Investors eyes focus on BoE quarterly inflation report tomorrow and whether they cut the growth forecast
• Overnight RICS House Price data for July showed a better than expected figure, moving from -26 in June to -22 in July, consensus was expected at -25.
• FTSE currently trading at 4.4% down already.
• Manufacturing and Industrial Production figure show declines across the board this morning, all figures were worse than expected.

ELSEWHERE

• Equity markets continue to fall, S&P finishes 6.66% down and the DJ down 5.5%
• Credit rating agency Moody’s confirm they are leaving the US unchanged at the time being.
• France's AAA rating looks under threat, as the cost to insure their debt rises sharply after the recent US downgrade.
• ECB continue to buy back Spanish and Italian Bonds, however investors do not feel this will be a long term solution as this type of support cannot be sustained for countries facing financial difficulty.
• JPY and CHF still continue to hold strong despite attempts by both their central banks to weaken their currencies with intervention.
• Overall picture for the US looks bleak, however day-to-day data has been better than expected with recent unemployment figures falling.

DATA TO LOOK OUT FOR

• UK Trade balance is expected to show a slight improvement from £-5.109b to £-4.8b for June
• UK NEISR GDP Estimate results are published at 3.00pm, the data is an estimate of growth in the last 3 months before the official GDP figures are released. The report is generally seen as very reliable and can influence monetary policy. The last figure published was 0.1% and any surprises either to the up or downside could have a fairly dramatic effect on the pound.
• This evening at 7.00pm the Fed Interest Rate Decision meeting will reveal US monetary policy for the near term future, interest rates are expected to stay at 0.25% and QE3 is unlikely to start today but the following press conference will provide us reaction to the recent S&P ratings downgrade and where the US want to head from here. There is the potential for overnight volatility throughout the currency markets in all pairs as risk is a big driver over recent weeks.

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.

This with the reassurance and security of UK FSA authorised and regulated advice - essential for your security.