GBP/USD 1000+ pips down ahead of Scotland independence referendum

Google+ Pinterest LinkedIn Tumblr +

The British Pound has been sold heavily in this Monday (September 8), the market opening price 1.6198. GBP/USD closed in NY Friday at 1.6327 (GAP 129 pips).

GBP/USD Daily Chart. 3 Apr - 8 Sep 2014
A new opinion poll has put Scotland’s pro-independence camp ahead for the first time in the campaign, just 11 days before the referendum on splitting from Britain. The YouGov/Sunday Timespoll gave the “Yes” camp 51 per cent support compared to the “No” camp’s 49 per cent, excluding undecided voters.

What will happen to the value of the pound sterling should the Scottish nationalist’s succeed in their bid for separation from the UK? Sterling risks losing value in the event of a Yes vote.

The UK current account balance would deteriorate because of the loss of oil exports, which would be only partly offset by a current account surplus with Scotland.

Bank of America has told in June, that the continuing UK’s debt ratio is likely to increase, at least in the short term, under certain scenarios. Such an increase could lead to higher fiscal risks, given the already high debt-to-GDP ratio, and to a tighter fiscal policy. Both could lead to a looser monetary policy than otherwise. A slightly smaller fiscal deficit than otherwise would only offset part of this impact.

At stake in the Scottish independence referendum on September 18 is the future of the stability of a pound sterling, that is still ranked by the International Monetary Fund as the world’s third most important reserve money after the dollar and the euro.

Conclusion

That said, exchange rate markets have bought the rumor yet. The facts will be 18 September, and the effect of the results will be very swift. Of course, if Scotland votes No then pound sterling valuations will fly up, at least to 1.68. After all, even if it is a reversal of a long-term trend, the short squeeze correction has not been canceled. So let’s see.

Share.

About Author

Hi, Friend! My name is Gran Layson. I am an experienced currency and stock trader from Europe. If you want something to be done well, do it yourself, therefore often I feel myself as “Swiss Army Knife Man”. I am the Intomillion’s website administrator, developer ... read more

1 Comment

Forex Brokers
  • We believe in what we do

    Since the foundation of the project, we have been trying to turn one Dollar into a Million. Many dollars were lost on the way to the cherished goal. Nobody said it was going to be easy. However, we believe that everything is possible. Each time we lose a Dollar, we start again stronger with more experience and dedication. Today the project is much more than just about a Dollar. Our philosophy is openness and transparency. So apart from trading on Forex, we are creating a variety of useful Tools, sharing our developments, ideas, and experiences with our followers. We are true fans of financial markets and looking forward making trading more understandable and showing that profitable trading is possible.





    Subscribe to our newsletter:


    Please leave this field empty.

  • Latest Tweets

    Next try to make million is on @IC_Markets #metatrader with a classic (not micro) account. Good luck to me.

    Time to go long on #gbp? Now or wait for September. Looks oversold against crosses.

    We still #short in #eurusd , should see at least 1.1050

    Load More…

All information on this page is subject to change. Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors. Please do not trade with borrowed money or money you cannot afford to lose. Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. Intomillion.com owners and affiliates will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results.