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 enjoyed a day of gains against a struggling euro on Monday after Irish and Portuguese banking sectors came under heavy scrutiny. After last week’s more optimistic data releases and the decision to leave monetary policy as it stands for another month the pound has been thrown a lifeline.
The all-conquering euro has not enjoyed such a pleasant few days and over the weekend, Irish debt crisis reared its head again after lying dormant for some months. Like the UK the Irish government are talking about a rigorous programme of budget cuts to drag themselves back into the black. Ireland’s main opposing political party have said they won’t be backing the plans which have raised concerns whether it will be passed in the coming months. The Irish press on Sunday quoted an unnamed "senior market player", who said the government's bet that €6bn in cuts will help Ireland return to the debt markets in 2011 would be hard to implement
Positive Trade Balance data for Germany released yesterday did little to help the euro as Portugal’s debt problems re-emerged as well. The spread or margin on the 10-year bonds of Portugal over bunds (the German equivalent) widened to as much as 444 basis points, the most since at least 1997, two days before the country plans to sell up to €1.25bn in debt. Portugal is another country that’s working to reduce its budget deficit and really needs to enjoy a successful bond auction to pump some money back into the system.
Of the back of this information, the pound climbed against the euro throughout the majority of the European session, having been at €1.1552 during Asian trading and topping out at €1.1616 at 4.00pm.The euro remained fairly flat against the dollar, falling just over 0.2% on the day to close at $1.3914
The pound lost a similar amount against the dollar dropping to $1.6112 from a session high of $1.6162. The dollar has received a brief respite after Friday’s Non Farm Payrolls surprised the markets and improved sentiment after the 2nd bout of quantitative easing last week.
Traders have pointed out the QE increase was highly anticipated, but what is going on with the Eurozone periphery nations is unsettling the markets and can potentially lead to more significant problems for the euro.
“This could be just the tip of the iceberg for the euro -- it could head back below $1.35, and maybe even back to $1.30,” said a director of foreign exchange in Toronto at Bank of Montreal. “The problems in Europe are a lot bigger than the market’s priced in just yet.”
Any pound traders will be looking to Wednesday’s inflation report from the Bank of England. It will include the BoE's latest growth and inflation forecasts and will be followed by a press conference with Governor Mervyn King. Eyes will be on whether there are any clues on how close the MPC were to embarking upon our own 2nd bout of QE. Kings comments over the last two years have not done sterling any favours so there will be strong resistant levels above $1.62/1.63 over the next few days.
The European banking worries also hurt the Australian dollar which fell against the US dollar for the first time in 8 days. As the bond margins widen, demand is reduced for the riskier currencies and the Aussie fell to a whisker over parity at $1.0085 after a record high last week of $1.0172
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.
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