QROPS Market Report - Rise and Fall of Currency

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 made gains across the board on Friday most notably against a broadly weaker dollar, the pound rose to an 8 month high last reached on January the 29^th as it pushed through the technical barrier of $1.61 to reach the day’s high of $1.6105.

Yet these gains were short lived as it ended the day’s trading around the $1.6030 level as the prospect of further easing in the US had already been factored in.

Sterling’s gains were due to dovish comments from Federal Reserve Chairman Ben Bernanke who stated low inflation suggests the case for further action for the economy in the form of quantitative easing which has being weighing on the dollar over the last few weeks. He was quoted as saying:

"There would appear, all else being equal, to be a case for further action," he said, in

a speech to the Boston regional Federal reserve.

The US central bank is expected to back a move to buy US government bonds in order to lower borrowing costs at its next meeting on the 3rd of November; this is mainly due to unemployment and low inflation which is putting the US economy’s recovery at risk. He has given no clues to how much the quantitative easing will need to be increased by but did state it’s likely to target US government bonds.

Against the euro the pound traded fairly flat on the day but was shown support from European corporate demand for the pound, it managed to move away from the 6 month low hit on Wednesday of €1.1313 after weak UK data added to the mounting speculation the bank of England would need to adopt further asset buying to stimulate the economy. The pound reached a session high of €1.1441 from the earlier low of €1.1371.

"The euro has been very well-bid generally and I wouldn't expect much downside, though in the bigger picture it's been approaching a range-top and is starting to look expensive," said currency strategist at nabCapital.

The euro gained against the greenback hitting a day’s high of 1.4156 up from the earlier low of 1.3986, the dollar has lost 15% against the euro since early June as we have seen investors move from the dollar and invest into the single currency.

All attention is now focused on the upcoming release of the Bank of England minutes on Wednesday and the government’s spending review also due the same day, investors will be keen to get some idea how the Bank of England policy members voted on QE and how the proposed budget cuts will affect the UK economy’s recovery.

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.

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