Scottish Referendum and British Pound Sterling Forecast Special - TopicsExpress

Scottish Referendum and British Pound Sterling Forecast Special Report - Last month was the worst month for the British Pound to Dollar exchange rate for 7 years, the GBP has also fallen versus the Euro (EUR) and most of the other 13 most actively traded currencies, why you ask? The UK economy has shown the best growth of any developed nation. Interest rates are likely to start rising anytime soon in a climate where the ECB are lowering rates and the FED are back pedalling fast. The answer can be attributed to uncertainty surrounding the future of the ‘United Kingdom’, polls published earlier this week are now estimating 54% for the ‘no’ campaign and 46% for the ’yes’ campaign, this 8 point difference is the closest it’s been and getting closer by the week. The case for independence is gaining traction with both the ‘rogue’ younger voters and the ‘squeezed middle’ looking for an opportunity to put two fingers up to a disaffected Whitehall, television debated have been a close run thing. Most of the most prosperous nations on earth are smaller, the ‘small but perfectly formed’ argument does hold water. Investors are getting worried. Could a huge part of the UK economy be about to jump ship and take North Sea oil and gas along with it. Some analysts have predicted a yes vote will send the Pound’s exchange rate tumbling by over 10% versus most of its counterparts. This would put the Pound to Dollar exchange rate below 1.500 GBP/USD, the Euro to Pound exchange rate above 90 Pence and the Pound to Australian Dollar below 1.600 GBP/AUD, eroding recent gains and potentially pushing the UK economy back into recession. The chance of Scotland leaving the United Kingdom is still relatively low and most analysts are expecting a slight weakening of the Pound leading up the referendum on the 18th September but once all the voting is completed and the ‘better together’ campaign prevails they are expecting the Pound to soar back to new highs versus the Euro and Dollar. “This level of uncertainty is holding the Pound’s exchange rate artificially low at the moment, we can’t see Scotland leaving the UK but we have to prepare for the worst, we are currently neutral on the Pound but would turn negative if the polls tighten, super negative if the vote is yes, we are also selling a lot of options and forward contracts to clients looking to hedge exposure before the vote,” said a senior Forex broker earlier. - See more at: exchangerates.org.uk/news/10181/pound-sterling-scottish-referendum-forecast-pound-to-dollar-euro-exchange-rates.html#sthash.1vDiddnu.dpuf