Morning Brief – Australia

Australia

With the Reserve Bank of Australia (RBA) raising AUD interest rates to 3.1% which is a 10 year high, it has thrown the GBP/AUD rate back into the spotlight. Trading lower at AUD1.8185, nevertheless GBP remains at its highest level since March 2022 and still represents value-the range has been pretty much 1.80-1.90 for most of the past 5 years- if one ignores the spike on 20-03-20 when those with a good memory can recall that blip when it traded 2.09. Strewth.

Northern Ireland

It may not suit the agendas of some, but a new poll has been released that shows that twice as many Northern Irish voters would vote in favour of remaining in the UK rather than leave and join a united Ireland. South of the border it is a different story with a 4 to 1 majority in favour of a united Ireland. For those overseas readers asking themselves the question of what that means: unification can only take place IF there is a clear majority in both Northern Ireland and Ireland for such a move.

GBP/EUR 1.1585.

UK Domestic Gas Prices and Inflation

One of our SGM-FX Daily Brief readers has asked what makes up his gas bill and when will the amounts he pays return to earth from the stratospheric levels that he is currently not enjoying. 

Taking the first half of the question, the domestic gas price comprises wholesale prices approximately 45%, network costs 18%(the means of delivery), policy costs 8% (including investment in alternative energy and subsidies), Operating costs 10%, VAT at 5% and a rather large Other 14%. 

So the more optimistic view is that wholesale gas costs are slightly less than half the total and they are coming down. The realistic and also the less optimistic view is that according to the price for futures contracts, the current price does not fall in the near future, in fact it continues to rise to a peak in December 2023 before starting to fall in March 2024 before dropping by approximately one third by June 2024. Without wishing to be the bearer of bad news, bearing in mind that the predicted drop in inflation is largely predicated by lower energy prices, this should give pause for thought. Received wisdom from politicians at least is that gas prices will fall sharply early in 2023 but regrettably this is a further example of wishful assertions from politicians being at odds with the realities of the pricing in financial markets.

Europe

For those readers interested or indeed concerned for themselves or their offspring about alcohol consumption, it turns out that to the surprise of some (many) the UK languishes in 18^th place behind France, Germany and Austria, according to the well respected OECD. At the front of the queue for the bar are Latvia, Czech Republic and Lithuania who all consume about 12 litres of alcohol annually for each and every adult member of their populations. Hic.

Night Moves

For most of 1976 American singer Bob Seger from Detroit, Michigan was scraping a living in the music industry but that all changed this day in 1976 when he released this album which pole vaulted him into the success stratosphere and generated sales of 5 million. Here is the song of the same name:

I was a little too tall, could’ve used a few pounds
Tight pants points, hardly renowned
She was a black-haired beauty with big dark eyes
And points of her own, sittin’ way up high

Way up firm and high
Out past the cornfields where the woods got heavy
Out in the back seat of my ’60 Chevy
Workin’ on mysteries without any clues

Workin’ on our night moves
Tryin’ to make some front page drive-in news
Workin’ on our night moves
In the summertime
Umm, in the sweet summertime

We weren’t in love, oh no, far from it
We weren’t searchin’ for some pie in the sky summit
We were just young and restless and bored
Livin’ by the sword

And we’d steal away every chance we could
To the backroom, to the alley or the trusty woods
I used her, she used me but neither one cared
We were gettin’ our share

Workin’ on our night moves

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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