Expect a roller coaster for sterling as “the day of truth” arrives.

Sterling opens “on the up” against both the euro and the US dollar and very close to the highs seen in the middle of this year against the euro. A positive day for sterling yesterday initially saw it gain ground against both the euro and US dollar as UK unemployment fell to its lowest level in five years. However, come the end of the day sterling did fall against the US dollar following the US Federal Reserve’s announcement on interest rates. With the Scottish referendum on independence being held today, we would have expected to have seen uncertainty around the sterling markets yesterday, all else being equal. However, positive economic data from the UK provided sufficient reason for investors to get behind sterling. Minutes from the latest Bank of England policy meeting showed that two members of the Monetary Policy Committee remained in favour of increasing interest rates, despite the recent fall in inflation. Along with this, the UK unemployment rate was shown to have fallen to 6.2%, the lowest level since February 2009, while average earnings had increased slightly.

Today we see Scotland’s historic vote on independence take place. With the sides appearing neck-and-neck heading into the final day, it is hard to call which way the vote will go. What we can expect to see is significant and quick movement in sterling rates during today and following the announcement of the result tomorrow as markets react to the latest updates.