Special Report - The Scottish Referendum

Claire Hogarth18/Σεπ/2014Currency Updates

By Enrique Diaz, Chief Risk Officer at Ebury

The crucial referendum on Scottish independence is taking place today. The consensus is clearly still expecting a No vote, in spite of the recent tightening of the polls.

  • The latest poll by ICM showed the No camp ahead by just 4 points, though this was down from 10 points a month before. The Financial Times Poll tracker shows that the average of the most recent polls puts the No ahead by 3% with 9% undecided.
  • Traders have increased sharply their long positions in sterling, according to the IMM positioning report. Only the USD presents a larger long position than GBP. Clearly feeling among currency speculators is that the result will be No.
  • On a less rigorous note, Betfair reports gamblers are placing a 79% chance of a No vote.

With this level of positioning we would expect a very sharp downward move in sterling in the event of a Yes vote, which would catch markets wrong-footed. The rally in case of a No result would be more muted.

However, it’s an all hands of deck situation at the Bank of England and the UK Treasury. In the event of a Yes vote, we can expect a flurry of declarations from both to stabilise markets and assure everyone that, in the short term at least, it will be business as usual. At any rate, choppy trading and volatility is assured.

If you want to find out how the Scottish Referendum may impact your currency trading, get in touch on 0845 519 1009.


Written by Claire Hogarth

Marketing Executive at Ebury. English Literature graduate from the University of York and a motivated professional.