After 2 years of heated debate, fractious discussion and considerable angst, the Scottish Independent Referendum is finally here and according the TradeNext, the Pound is in for rough and turbulent ride, especially if the Yes wins.
Earlier this month, on predictions of a Yes vote, the Pound took a nose dive from 1.6644 on 1 September, to a low of 1.6052 just ten days later. This kind of weakness in the pound has not been seen since Nov 2013. Against the Euro sterling has been losing ground since the beginning of September. Tenth of September was the key date for EUR vs. GBP. The Euro reached a high of 0.8066, but expectations of a landslide Scottish Yes vote fizzled out and sterling began its rebound.
Farhan Ahmad, trader at TradeNext said: “While the opinion polls say it is still too close to call, the consensus in the city is that the Scots voting Yes is unlikely. The effect on the pound has been reassuring. Sterling has appreciated against the greenback to a high of 1.6310 overnight. Since the last three days the pound has gone form 1.6268 against the dollar to trade at 1.6284, near a key level, at 0613 this morning.
“We can expect cable to trade between 1.6360 on the upside and 1.6170 on the back of rumours and polls over the next 24 hours. I would prefer to be small long of GBP ahead of the vote although flat is the more prudent option.
“Against the Euro we saw sterling strengthen overnight from 0.797 to 0.79546. Over the next 24 hours we may see some small moves but if we see the Euro gain against the pound and break the 0.8007 level, the word of the day is sell.”