Currency Note Sterling

Worries over Scottish Independence scupper sterling

By Callum Holmes September 8th, 2014

Despite the ECB beginning to do “whatever it takes” to boost the Eurozone economy, the euro has actually strengthened slightly against sterling and against most other currencies, especially against the US dollar, sterling is in free fall. The reason for this is the sudden but, to many, not unexpected shift in expectations for the Scottish Independence vote from NO to YES to independence. Against the US dollar sterling is heading towards rates last seen in 2013.

I think it is fair to say that sterling is at the mercy of the markets this week and the latest news on the Scottish Independence vote so expect significant and rapid movements. Other than that the week ahead sees relatively few influential economic reports from the UK. Things kick off on Tuesday with Governor Carney of the Bank of England (BoE) speaking in Liverpool. With the recent uncertainty around sterling and interest rate rises, investors may look for some guidance here. Manufacturing production figures from the UK are also released on Tuesday and are forecast to show modest growth. Wednesday’s inflation report hearing from the BoE is likely to be the most influential release from the UK this week. This sees a number of BoE policy makers testifying on UK economic outlook.