Thursdays vote on Scottish Independence is still the key event this week and if the outcome is ‘Yes’ probably for the next few months given all the uncertainties. In contrast though yesterday was a quiet day for sterling which saw it hold its own against both the euro and US dollar following the release of inflation data which came in line with expectations and even gain a little bit of ground towards the end of the day. Inflation was shown to have fallen by 0.1% throughout August, to stand at 1.5% and prompt a recovery throughout the afternoon. A late surge was seen against the US dollar following the People’s Bank of China’s decision to implement a policy of quantitative easing. With the Chinese currency ‘pegged’ to the US dollar, this created a knock-on effect for sterling to capitalise on.
The latest opinion polls released this morning showed that it was too close to call on the Scottish vote. Also today we have the release of minutes from the latest meeting of the Bank of England’s monetary policy making committee. Any change from the previous voting pattern when two of the nine members voted to increase interest rates by 0.25% could result in major market movement given the “too close to call” position in Scotland.