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Published On: Wed, Sep 3rd, 2014

GBP under pressure after poll shows supporters for Scotland’s separation from UK increase

The British pound declined massively compared to its Monday level, after poll results regarding the forthcoming referendum on Scotland’s separation from the UK showed a large increase in supporters of the split.

GBP under pressure after poll shows supporters for Scotland’s separation from UK increase.

The British pound slumped in the wake of a poll yielding results of sudden soaring of support for Scotland’s separation from the UK. The results came just two weeks before the public referendum on approval of the separation.

In early morning trade on Wednesday, the GBP/USD declined to to $1.6443, more than a five-month low and significantly below the $1.6608 Monday level.

The cable selloff started after the survey by the UK’s YouGov market research company on Tuesday. The results showed the gap between supporters of the separation and its adversaries had narrowed. Scotland has been part of the UK for over 300 years. Now everyone is keenly awaiting the referendum on September 18.

Most analysts believe Scotland will still stay within the UK, but the recent YouGov results have channeled expectations in a new direction. The impact of Scotland gaining independence on the UK economy is still very hard to judge; the uncertainty about the currency that Scotland will decide to use also adds to the adversity.

1,063 people participated in the YouGov poll; out of those, 47 percent showed support for the separation and the remaining 53 percent were in favor of the UK’s remaining intact. The gap between the two groups has shrunk to under half of the percentage reported in the middle of August. The results are all the more telling because the YouGov surveys have tended to show larger percentage for the opponents of the separation.

The GBP/USD 1.6460 major support held the first major test today. Yesterday’s impulsive movement and the daily close just a few pips off the level, however, reveal that the downside for the British pound has not finished. Next major support on the way down is located at 1.6250 and is expected to be tested in the near term.

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