QROPS update27th January 2012 Pension Drawdown & 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).

IN THE <?xml:namespace prefix = st1 />UK

• Sterling started the morning session by trading in and around the $1.5650 level to later post a 5 week high at $1.5735 versus the USD.
• GBP/EUR hit a 4 week low on hopes of progress in Greek debt talks and worries about UK economic weakness posting a low of €1.1915 in the afternoons trading session.
• Analysts said poor fundamentals in the UK may limit any upside for sterling against the dollar, especially on the back of the release of the MPC meeting minutes on Wednesday.
• CBI figures released yesterday showed sales suffered their biggest annual fall in January since March 2009 (when UK was last in recession) posting a figure of -22 against a forecast -2.

ELSEWHERE

• USD has come under selling pressure after the U.S. Federal Reserve said on Wednesday it would keep interest rates near zero until late 2014 and the option for further QE still remains.
• EUR/USD traded as high as 1.3184 to its strongest in a month, stronger German consumer confidence contributed to this rally by easing concerns about a Eurozone recession.
• Japanese Yen rallied against the USD yesterday as US 10-year Treasury yields fell 2%, the dollar-yen pair is closely correlated with US debt with lower yields providing less incentive for Japanese Investors to seek income overseas, in turn strengthening the Yen.
• Italian 10yr bonds dropped below 6% (5.98%) for the first time since the ECB announced plans for emergency 3 year loans in December to prevent a credit crunch in the Eurozone.
• For the first ever, German 10 year bunds are selling at a lower yield that US Treasury bonds, yields are directly correlated to the risk attached to the investment and this turnaround in sentiment is significant as it shows despite the Eurozone crisis, Germany is still seen as safe bet.  a
• Low employment in Germany helped boost sentiment within the Eurozone for a 5th month in a row, morale in Germany should increase further in the month of Feb.
• EUR/USD repel negative EUR news including the continued rise in Portuguese bond yields and reports that the ECB is split on how to handle their holdings of Greek debt.
• There was also comments that a Greek deal could be close to with creditors ready to accept a lower coupon payment. A majority of these rumours end up being red herrings, so sceptical views remain about the accuracy.
• All 3 commodity currencies strengthened verses the USD amid the possibility of further QE from the US. The AUD and NZD both reached highs not seen since October and the CAD broke the parity line during yesterday’s trading. 

DATA TO LOOK OUT FOR (all times GMT)

• ECB President Mario Draghi, speaks today at 1.15pm
• US GDP is released today at 13.30pm, the market will be paying particular attention to this, from the release of the FOMC statement Wednesday evening, the data is expected at 3.0%
• US University of Michigan consumer sentiment figure, is released at 2.55pm and is expected to post a figure of 74.2 against last month’s figure of 74.0.   

Have a great weekend.

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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