Daily Brief – British Pound

British Pound

A reflection of post Budget relief that it’s over rather than due to its imaginative, growth positive or business friendly measures which are all conspicuously lacking, but British Pound is up over 1% this week. Braver voices than our own have claimed that a more positive view of British business activity is the reason for GBP rallying, but we stick to the view that it is much more down to the Budget Risk being priced out. Meanwhile, the British Pound is enjoying some winter sun.

GBP/USD 1.3352.

London

A snapshot of the London political map taken 2 years ago ie 6 months ahead of the last General Election was an eye rolling and predictably a predominantly Red or Labour patchwork across the UK capital and some rather smaller areas of Blue or Conservative but not much and still less Yellow or Lib Dem. Scroll forward to today and while the Blue areas are largely unchanged, there are some new colours on the map and rather than unsurprisingly them being dominated by Reform which has of course increased its land grab, it is the Greens who are soaring in popularity. Improbable that it is down to the Greens’ invariably eccentric and inarticulate leadership, so it must be something else that has so dramatically eroded Mayor Khan’s Red populist measures. Step forward the likely culprits: Avocados or the Aggrieved Victims of Crushing Academic Debt Obligations. Newly minted grads with student debt are on a repayment treadmill but at the same time struggling with smaller pay packets resulting from frozen income tax allowances and the ravages of inflation. So why the Greens? The answer is that they have pledged to forgive all Student Debt when they assume power. With GBP 267 Billion Student Loans outstanding, that is a big pledge and one which some will question on its deliverability.

GBP/EUR 1.1433.

Henry Hub

No need to reach for ChatGPT – this is the name given to US Liquid natural Gas or LNG prices. In case it has passed you by, European LNG prices have fallen 45% this year and 90% since their peak in 2022. Remember when all those (nice) energy companies spread doom and gloom and encouraged you to lock into fixed price contracts at those historically high levels? Back to Henry Hub: gas market tyros spend a lot of their waking hours monitoring the relationship between EU and US LNG prices – to give you a clue EU prices traditionally trade above the US or Henry Hub prices. That premium has been between USD 5 and 10 per million British Thermal Units or MMBtu for most of the past 5 years. As we go further into winter, we looked at inventory levels and note that on average across Europe, stored gas is roughly 20% below its long-term average. So presumably LNG prices are going up as consumption and demand rise? No. They are falling, and the reason is the over supply of US LNG:  Europe has become the market that US LNG is being dumped in as demand in Asia has waned. Thank you Henry Hub.

EUR/USD 1.1667.

Sustainability

Sustainability apparently sells sports kit so Nike, Lacoste, and Superdry all dutifully included claims that their products among many other things offered sustainability. The UK Advertising Standards Authority however does not see that there is any evidence offered by those companies that that is indeed the case, so they have banned adverts from all 3 which claim sustainability and deemed them misleading. Who would have thought that a sports shirt made100% from synthetic material might not be sustainable?

EUR/JPY 180.55.

Begin the Beguine

This day in 1981 smouldering Spanish singer Julio Iglesias was at Number 1 in the charts with this number also known as Volver a Empezar which turned out to be his only Number 1. This song was originally a 1935 Cole Porter song that was translated into Spanish and sung by Artie Shaw who is estimated to have generated sales of 1 million plus on 78rpm vinyl. In the UK, Julio Iglesias went down a storm and sold 400,000 copies of the single and 100,000 copies of the album.

When they begin the beguine
Quiero sentir
Las cosas de siempre
Quiero saber
Si tú aun me quieres
Quiero volver a empezar

When they begin the beguine
Quiero saber
Que fue de tu vida
Quiero saber
Si todo se olvida
Para volver a empezar

Yo que siempre jugué con tu amor
Hasta el final
Y seguro yo estaba que tú
Aun me querías
Hoy al ver que ya todo acabó
Que no daría
Para volver a empezar

Día a día te hacías querer
Un poco más
¿Quién me iba a decir que una vez
Te perdería?
Y hoy al verme tan solo sin ti
Que no daría
Para volver a empezar

Have a Great Weekend!

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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