Qualifying Recognised Overseas Pension Scheme

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 lost ground across the board yesterday after Bank of England Monetary Policy Committee member David Miles commented on the possibility of extending Quantitative Easing somewhere down the line. This comes just a week after his fellow policymaker Adam Posen made similar comments. Miles stated that QE remains a potentially powerful tool and one that we might come to use.

The pound had started the day on the up, as investors expected CPI figures to stay above the Bank of England target rate currently at 2%. Last month’s figure stood at 3.1%, and if it remains above the target level then it could weaken the chances of further QE being adopted.

The CPI figure was on par with consensus, and Retail Price Index (Year on year) came in 0.2% above the consensus figure of 4.4% and sterling did initially gain some ground back against the Euro early on reaching a day high €1.1494.

However Miles’s comments shortly after weighed on the pound, along with the British Chambers of Commerce announcement that economic activity had slowed sharply in the third quarter and they thought it necessary for the BoE to inject more stimuli to aid the recovery against planned government spending cuts. This slumped sterling to a 1 week low of $1.5779, and by the end of UK trading the pound had dropped to as low as €1.1385. The UK Goods trade balance also fell below consensus which did not aid sterling in any way. However the figure was an improvement Month on month moving from - £8.675B to - £8.227B.

Miles was like Andrew Sentence, one of the Bank of England’s optimistic Hawks, however it seems that he has now found a middling ground and is unsure of the outlook, which was shown yesterday.

Strategists from various sources think that the ‘will they’ or ‘won’t they’ scenario, will continue to cause high volatility for the sensitive pound.

At 1800 the FOMC (The Federal Open Market Committee) discussed the outlook for the U.S. economic situation. There has been much talk recently as to whether the U.S. will have to extend their QE by a potential additional $1 trillion. This has caused the USD to be sold off by investors, which has weakened it considerably. The meeting suggested that policymakers are split as to the quantity of QE they will need to adopt, but investors are betting that the amount needed will be vast.

Immediately after the discussion the dumping of USD saw the Euro benefit thus strengthening it to $1.3990 and the Euro strength saw sterling fall to 6 month low €1.1309. The Euro seems to be the strongest of the major currencies at the moment, as no talk of further QE has been mentioned, and cash rich country China have been investing in the euro zone recently.

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.