Special Report - Effects of the Scottish Referendum

Claire Hogarth19/Σεπ/2014Currency Updates

By Enrique Diaz, Chief Risk Officer at Ebury

Scottish voters have rejected independence by a considerable margin, much wider than had been hinted at by the polls. The large margin is important, in our view, and positive for Sterling. It excludes the possibility that a repeat referendum will be called in the foreseeable future. The status quo is safe in the United Kingdom, and that is always good for the currency.

The sell-off in Sterling after the referendum reflects the overwhelming prior consensus among traders that the result would be a No, and the resulting stretched long GBP position. A clear case of ‘buy the rumour, sell the news’. We think trading will remain choppy until this position is cleared out, which we expect to happen in a few days.

The main remaining obstacle to a Bank of England interest rate hike has been cleared, and so we expect this to happen in the second quarter of 2015.


Written by Claire Hogarth

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