51% of voters for Scottish separation, GBP drops further
If there’s one thing the markets hate more than weak results, it’s surprise.
When plans for a Scottish Referendum were announced, the markets took it with a pinch of salt and have continued to do so, but as the vote on September 18th edges closer, everyone has woken up and started to get a little scared.
For the first time, a YouGov poll released yesterday showed that 51% of voters were in favour of separation. This unpredictability has led to Sterling dropping even further and as we should see this continue. As I see it, the problem with the separation is that no one really knows what it entails and, if I were being obtuse, I would suggest that this could be because no one actually thought it was going to happen.
Would the Scots keep the Pound? Will they renege on their share of the national debt? No one seems to know. Least of all the people actually involved. This unpredictability leads to huge amount of volatility so hold on to your hats, it could be a bumpy ride.
The Weak Results
Weaker than expected non-farm payroll figures have done nothing to stop the strengthening of the Dollar/weakening of Sterling/Euro either. Only 142,000 workers were added in August which was significantly lower than the 225,000 forecast. The Federal Reserve will have to work out whether the US has now reached full capacity for employment and start increasing rates, or whether there is still some time to go before this happens which could result in a sharper increase in interest rates.
The economic calendar isn’t overly busy today, apart from some speeches out of the US and US consumer credit change data, so expect it to be a tough day for GBP.