Morning Brief – GBP strong for long?

GBP strong for long?

To begin with GBP is at its highest level since July this year when it briefly marched up to GBP/USD 1.31 and the reason for that is that the market has bought into the argument that the Bank of England will keep interest rates higher for longer. On that basis, holders or future buyers of Currency and sellers of GBP should remain relaxed. However keeping rates high for too long, will as night follows day, soon start to feed through into the economy and force the UK into a recession of unknown length and depth. That means that on economic outlook grounds alone, GBP strength is likely to be short lived and could be very short lived. Buyers of Currency versus GBP would be well advised to set objectives and scale their buying.

GBP/USD 1.2675.

Australian Wine Exports

Australia’s biggest wine export market is China or rather it was until 2021 when after a peak of AUD 1.2 billion of sales to China, China imposed tariffs and restrictions which effectively killed that lucrative trade. Now it appears that Australia has made sufficient progress to be able to announce this weekend that it is confident that those quotas will be removed and gallons of Shiraz, Chardonnay and Semillon will once again flow north to China at the start of 2024.

USD/AUD 1.4930.

Cheaper Gas in the UK?

The law of unintended consequences: stories of how normally 38 ships pass through the Panama Canal daily but due to a drought and lower water levels that number has shrunk to 22. That was a Christmas scare story for Western Europe and the UK due to all sorts of goods ranging from iPhones to fruit not reaching the designated markets. Those stories can be safely ignored for Christmas at least, since the Christmas goods have long since been delivered. However the Liquid Natural Gas designated for the voracious China market cannot pass through the Panama Canal from the Gulf of Mexico which means that those shipments need to find alternative markets. And what that means is that the UK is a beneficiary of that Chinese gas. So before listening to the blandishments of your energy company to lock into a fixed gas tariff, it may well pay you to hold off as those fixed price gas tariffs may well be about to get cheaper.

EUR/USD 1.0895.

Office Vacancies

At the end of 2019, office vacancies in the USA stood at 12%; the forecast for 2024 in the USA is 20%. Here in the UK similar to the USA, office vacancies stand at a 20 year high, but as at Q3 the absolute level in the UK was lower than in the USA and stood at 9%. Technology and media are the swing factors but are sending mixed signals in that investment in those sectors is clouded by a simultaneous continuing Out Of Office otherwise known as Working From Home situation.

GBP/EUR 1.1630.

(I Can’t Get No) Satisfaction

Until that was this day in 1983 when Rolling Stones Wildman guitarist and singer Keith Richards wed Patti Hansen with Mick Jagger as Best Man in Cabo San Lucas, Mexico. Happy 40^th anniversary to them (Keith and Patti that is) and one of the most improbable but longest running rock and roll marriages. Keith and Mick go back much much further.

I can’t get no satisfaction
I can’t get no satisfaction
‘Cause I try, and I try, and I try, and I try
I can’t get no, I can’t get no

When I’m driving in my car
When a man come on the radio
He’s telling me more and more
About some useless information
Supposed to fire my imagination

I can’t get no, oh, no, no, no, hey, hey, hey
That’s what I say

I can’t get no satisfaction
I can’t get no satisfaction
‘Cause I try, and I try, and I try, and I try
I can’t get no, I can’t get no

When I’m watchin’ my TV
And a man comes on and tells me
How white my shirts can be
But, he can’t be a man ’cause he doesn’t smoke
The same cigarettes as me

I can’t get no, oh, no, no, no, hey, hey, hey
That’s what I say

I can’t get no satisfaction
I can’t get no girl reaction
‘Cause I try, and I try, and I try, and I try
I can’t get no, I can’t get no

When I’m ridin’ round the world
And I’m doin’ this and I’m signin’ that
And I’m tryin’ to make some girl, who tells me
Baby, better come back maybe next week
Can’t you see I’m on a losing streak?

Discussion and Analysis by Humphrey Percy, Chairman and Founder

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