Sterling muted as Sturgeon confirms second Scottish referendum desires

Sterling held relatively firm yesterday, despite the twist in the saga that is Brexit. Sturgeon has confirmed that she will be asking the Scottish parliament for a Section 30 order from Westminster to allow Scotland to hold a second referendum on Scottish independence.

In September 2014 Scottish voters rejected independence in a 55%-to-45% vote. However, following the Brexit vote in June 2016, the landscape has changed. A total of 62% of Scottish people voted ‘Remain’. Sturgeon argues that the people of Scotland must be offered a choice between a ‘hard Brexit’ and becoming an independent country. She wants the vote to be held between autumn 2018 and spring 2019.

Whilst sterling’s reaction to this was fairly muted, the referendum could add further complications for the government. Not only will the government be negotiating with Europe but there could be a further referendum campaign to take into account as well.

May has so far given no indication as to whether or not she will grant permission for a second referendum on Scottish independence. There was speculation yesterday that it was mainly due to the referendum talks that May appeared to have moved the date for triggering Article 50 from this week to the end of March.

In terms of economic data, yesterday marked a quiet start to the week. Today is going to be fairly similar but political updates may move the pound. There will be more data later on in the week. We’ll have employment figures out tomorrow, followed by the Bank of England meeting on Thursday.