Sterling Spikes Over Scottish No Vote

On Friday last week we had the eagerly anticipated results for the Scottish referendum on independence, which to the delight of most was won by the No voters, keeping Scotland in the United Kingdom. With sterling battling the sellers of late as the polls showed a narrow split in votes, the news was a welcome one and the pound understandably spiked off the news. We actually saw the pound’s biggest spike come around 2am Friday morning, maybe in anticipation that the vote would be a No and continued to bounce around at levels not seen in years on some pairings, like against the euro which saw 2.5 year exchange rate highs.

With no data out for the UK and nothing of note anywhere else apart from Canada, the pound didn’t manage to hold on to its rally, tracking right back down throughout the day so those holding out for further gains lost out. We saw losses of a cent against the euro and 2 cents versus the US dollar, with similar losses against the antipodean Aussie and New Zealand dollars. Whether it was profit taking from the spike or just an over cooked pound from the news, it was a classic case of buy the rumour, sell the fact!

So we look toward the last full trading week of September and Q3 to see how sterling fares with investor sentiment compared to the in-favour US dollar. Rate rise talks stateside had USD on the front foot in recent weeks, so what now? To aid decisions we have the following ecostats to contend with:

• Monday – speech by ECB president Mario Draghi
• Tuesday – German and EU manufacturing and services PMI and UK mortgage approvals and public sector net borrowing. Also Canadian retail sales and US manufacturing PMI.
• Wednesday – Swiss quarterly central bank bulletin and UBS consumption indicator, German IFO stats and US mortgage data and new home sales figures.
• Thursday – RBA Governor Stevens speech (2.30am), US durable goods orders and services PMI
• Friday – German Gfk consumer confidence survey and US GDP after lunch.

Plenty to go off along with other less key stats so if you have a currency transfer to make don’t get caught off guard, contact one of the CI brokers for some friendly guidance. We are seeing some attractive trading levels on sterling pairs so get in quick to take advantage.