Cash and income timing from a UK Pension income drawdown, flexible pensionsor 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).
The release of the MPC minutes confirmed that policy makers would not be increasing Great Britain’s historically low interest rate. A unanimous decision, 0-9, indicated to the markets that the UK is unlikely to respond to consistently high inflation, and the committee reiterated its assertions that short term factors such as commodity prices are the key drivers.
The UK unemployment count did go up for the month of July with a 17.1k increase. On the back of early August’s London riots the Government has made £20million accessible to affected councils precisely to assist regeneration and job creation, but one can explain this unexpected increase as being reflective of an increase in the graduate job market over the course of the summer.
Talks within Europe, following the meeting between Germany’s Angela Merkel and France’s Nicholas Sarkozy, focussed on the potential introduction of a financial transaction tax – and this focus on the systemic and structural review of the EU saw sharp movements in the value of the single currency. From midday BST GBP/EUR rose from 1.1352 to over the 1.1450
before the close, which confirms that volatility still remains prevalent. The 1.2% year on year European CPI figure, coming in 0.5% below expectations, confirms that key economies such as Germany are seeing a slowdown of sorts. Across the pond the US posted a better than expected Purchasing Price manager’s Index, and when coupled with assertions that the Fed will keep interest rates on hold for as long as two years, suggested earlier in the week, we may see an increase in the effects of inflation withinworld’s largest economy too. GBP/USD has breached the 1.65 mark, and did so even before the European close. Against the EUR the dollar holds above 1.44, despite poor earnings figures coming through from a number of European companies, meaning that the day begins with European equities beginning firmly in the red.
Today brings more economic information for the United States, with Consumer prices, unemployment and homes sales coming under close scrutiny. With the majority of this information being released around midday it would seem that the focus will not be on European discussions, but this could prove to be a choppy day for the world’s reserve currency against the majority of majors.
IN THE UK
• The Bank of England’s Monetary Policy Committee votes unanimously to hold interest rates at record lows
• One of the MPC’s members, Adam Posen, as usual votes in favour of an increase to the asset purchasing facility; and the potential of further Quantitative Easing remains given the sustained level of inflation
• Average earnings in the UK rise for 2.3% to 2.6%, which both beats the previous month’s and exceed expectations. This does not account for the increase in unemployed graduate numbers, which is visible through and increase in the UK unemployment count
• Sterling shows a highly reactionary move; with a full cent change over the course of the European sessions. GBP moved from 1.1350 to 1.1450 over the course of the afternoon, despite European decision makers showing unity over the route the EU must take to reform its financial and debt policies
ELSEWHERE
• Consumer prices in general came through on par for the Eurozone, however the core price index did should a fractional drop below the expected 1.7% increase
• The majority of focus was on the notion of Eurobonds and their uses in controlling the contagion affect across the Eurozone. Whilst EUR/USD traded within a relatively narrow range (1.43809 – 1.4452) the market remains uncertain, and the ban on short selling has done to curb the drop off broadly across the European exchanges.
• The USD dropped considerably against sterling to reach a floor at 1.65536, prompting the view that risk had returned slightly to the market place, and that the UK was still the market of choice for credit and debt derivate contracts
• Although the CHF lost ground against GBP, it has been conclude that the SNB has been unsuccessful in curbing its significant strengthening, and there was no talk whatsoever of a currency peg, which had been on the cards earlier in the week
DATA TO LOOK OUT FOR
• US core CPI and unemployment figures should give a more detailed figure of the scale and effects of inflation on the US grass roots economy
• US existing homes sales are expected to exceed 4.77M forecast to reach a predicted 4.91M level
• A level figures released in the UK will reveal the effects of the secondary education uptake for the year to come, as more applicants and fewer places, coupled with a tuition fee increase may see an increase in the number of unemployed young people entering the market
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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