Gerard Associates-QROPS

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).

The pound reacted in a positive way after the Bank of England stated that it saw no need to add further stimulus to the UK economy. The Quarterly Inflation Report delivered a bullish assessment in comparison to previous months. In August, the Bank had said that the risks to growth remained, “weighted to the downside.” In contrast, Wednesday’s comments suggested that growth was judged to be, “a little more likely to be above its historical average than below.” Sterling hit a fresh six week high vs. the euro set against this back drop of an upbeat economic outlook. Despite the Bank of England commenting that inflation will be slightly higher in the near term, GBP finished the day up nearly 1% against the single currency.

The US dollar extended its gains as it enjoyed a flow of positive economic reports from the States. The trade deficit narrowed to -$44.0B from -$46.5B, and was accompanied by a fall in jobless claims by 24K to 435K (week ending November 6th). The positive sentiment within the market was fuelled by an underlying feeling of stability in the US economy. The Jobless Claims data was particularly favoured by the market as the figure fell to the lowest level since July. Doubts were raised as to whether the sharp increase in October non-farm payrolls could be sustained, but never provided any real opposition against the glowing reports from the U.S. MBA Mortgage Applications showed a 5.8% increase from the previous month of - 5.0% and US Import Price Index powered in at 0.9% against an expected -0.3%.

The euro fell to its lowest level for a month against the dollar, as concerns were raised of the ability of some European governments to pay their debt. The single currency dropped against most of its major counterparts as Irish 10-year bonds tumbled, leading a rout in debt from Portugal to Greece.

“We’ve seen the market more and more in tune with what’s happening in Europe and the significant risks that lie on the horizon,” said a Bank of Nova Scotia currency strategist in Toronto. “It’s just the impact of somewhat nervous markets, a lot of focus on potential pitfalls in Europe, the significant move in the European bond market.”

To summarise:

IN THE UK

• B of E Quarterly Inflation Report quashes thoughts of further stimulus to the UK economy.
• B of E warns of near term inflation forecast increasing due to higher commodity prices
• Sterling hits fresh six week highs against the euro of €1.1722
• The pound drops briefly below the $1.60 mark against dollar before rising and closing session at $1.6117
• Markets concentrated on the flexible outlook of growth and monetary policies.

ELSEWHERE

• US Jobless Claims data showed a reduction to 435K from the previous month of 459K, helping the USD hold some ground.
• US Trade Deficit helped the Greenback as it narrowed to $-44.0B from $-46.5B.
• US MBA Mortgage Applications pushed USD up as the figure showed a 5.8% increase from the previous month of -5.0%.
• Positive USD movement aided by the US Import Price Index. It came in stronger than expected at 0.9% compared to the expected -0.3%,
• All the above data meant the pound had limited gains against a well backed dollar whilst the euro tumbled to $1.3681

DATA TO LOOK OUT FOR

• Veteran’s Day ensure no data releases from the States and Canada adheres to Remembrance Day.
• Australian unemployment rate expected to fall to 5.0% which could strengthen AUD.
• Australian Employment Change expected to come in at 20.3K from 49.5K.
• G20 Meeting in South Korea, attendees will discuss how to implement the previously agreed currency valuation plans

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.