Tags: Scotland Vote | Britain | Pound | Poll | Scotland

Britain's Pound Rallies as Optimism Grows for Scottish 'No' Vote

Thursday, 18 September 2014 06:40 PM

The pound rose to a two-week high against the dollar Friday on speculation Scotland rejected independence in a referendum, keeping the U.K.’s 307-year union intact.

Sterling appreciated at least 0.3 percent against all 31 of its major peers as a YouGov Plc poll of voters Thursday predicted the “no” campaign gained 54 percent of the vote, compared with 46 percent for the nationalists. In Clackmannanshire, the first district to give its results, those against independence totaled 19,036, exceeding the 16,350 “yes” votes. The final outcome of the referendum was due early local time Friday.

“There’s been a good surge in the pound and a lot of that is probably pricing in the possibility of a ‘no’ vote,” said Imre Speizer, a markets strategist at Westpac Banking Corp. in Auckland, New Zealand. “Results from the YouGov poll, the last to be taken, coincided with a sharp rise in the pound.”

The pound rose 0.5 percent to $1.6474 at 1:42 a.m. London time, the strongest level since Sept. 3. Sterling appreciated 0.6 percent to 78.36 pence per euro, a level last seen in August 2012.

Scotland’s plebiscite will determine the future of a union that dates to 1707. The currency has dominated the two-year referendum debate, with all three main U.K. political parties rejecting the idea of letting Scots use the pound after separation, raising the possibility sterling would weaken under that scenario.

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The pound dropped to its weakest level in about 10 months against the dollar on Sept. 10 after a previous YouGov poll projected the independence movement was ahead for the first time this year.

Even amid increasing optimism that Great Britain will stay united, the pound remains 0.7 percent weaker against the dollar in September, set for a third month of declines. Sterling dropped as some economic data fell short of analyst estimates, and an increasing emphasis from policy makers on the U.K.’s anemic wage growth prompted investors to push back their expectations of when the Bank of England’s will enact its first increase in interest rates since 2007.

Forward contracts based on the sterling overnight interbank average, or Sonia, show investors pushed back bets on a 25 basis-point increase in borrowing costs to May, from February as recently as last month.

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The British pound rose to a two-week high against the dollar Friday on speculation Scotland rejected independence in a referendum, keeping the U.K.'s 307-year union intact.
Britain, Pound, Poll, Scotland
Thursday, 18 September 2014 06:40 PM
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