Pound continues to slide as investors brace for Scottish independence vote
11/Sep/2014 • Currency Updates•
GBP continues to look fragile amidst Scottish Independence vote, with the euro also remaining weak against the strengthening USD. A light data day, with no significant economic releases.
The GBP continued to look fragile against the major currencies with sterling falling to fresh 10 month lows against the dollar, dipping below levels set on Monday and Tuesday, due to continued concerns over the outcome of the Scottish independence referendum. Uncertainty over what currency an independent Scotland would use and concerns over how much of the UK national debt it would have to take on has instigated a broad selling of sterling. Britain’s three main political parties have gone into campaign overdrive after a weekend poll showed that the nationalists, led by Alex Salmond, had gained the upper hand, with many recent surveys showing that the September 18th vote will be too close to call.
Since the polls narrowed in the Scottish Independence debate there has been a 35% increase in the volume of currency transfers from Scotland, with a 67% increase in enquiries.
The euro remained weak following the European Central Bank unexpectedly cutting rates last week. There is a reluctance to sell the euro too aggressively after the market reached a new low versus the dollar.
The Scottish vote also remains a hot topic within the Eurozone as there is a concern that the Yes vote would set a precedent, with other smaller nations within the Eurozone potentially considering their own positions.
The ECB’s President Draghi will be making a speech after businesses hours on Thursday at 7pm GMT, 8pm local time.
The USD continued to trade near 14 month highs against the other major currencies as growing expectations of an early interest rate hike continued to boost the currency.
The USD continued to strengthen against the G10 with the Australian dollar (AUD) the major casualty, falling 0.8% against the currency due to weak consumer confidence within the country and a decline in the Australian iron ore price. Only the Norwegian krone (NOK) is strengthening at +-0.1% vs. USD within the G10.
The Japanese yen (JPY) also weakened against USD with the dollar rising to a six year high against the currency.