We are still united
The United Kingdom remains intact as we know it. One the most significant events in British politics perhaps, since we were last taken to war has resulted in just over 55% of Scots voting NO to an Independent Scotland. Of course this does mean that a massive 45% of scots will be disappointed by the outcome.
David Cameron has promised sweeping changes to how the UK is governed, so that means we will expect a more accommodative policy for the Scots. The sentiment among those we have talked to this morning is one of acknowledgement and respect for the Yes campaign and happiness that the union remains in tact.
As votes started to be counted overnight GBP movement was significant with GBP/EUR breaking 1.2800 and GBP/USD breaking 1.6500. Both have now pulled back and settled below this levels.
Despite the relatively modest move up in GBP, with the political risk removed we should now see the economic fundamentals take over as these let behind to focus again on interest rate rises (some tipping the BoE to move as early as November).
As such back on the economic calendar roundabout Moody’s has France and the UK up for review. There has been speculation about a possible downgrade of France but we expect the rating to be on hold.
Otherwise there will be some focus on the repayment of the ECB LTRO (basically a cheap loan scheme for the European banks), as some banks may simply be rolling money from the LTRO into the TLTRO (A longer term cheap loan).