Will Scotland get a second Independence Referendum vote?

It has been confirmed by Theresa May’s official spokesperson that Article 50 will not be triggered this week, although both Houses of Parliament have now approved the Brexit bill without any amendments. Speculation is mounting that this will occur in the last week in March, just after the remaining 27 members meet in Rome for the 60th Anniversary of the European Union on 25th March. Although it is almost certain that Article 50 will be triggered by the end of the month and has been priced in to the value of the Pound, it will probably be other political events which cause major Sterling movements.

During Theresa May’s statement to the House of Commons yesterday, one of the main topics of discussion was whether Scotland could hold a 2nd Independence Referendum (AKA IndyRef2).

What could another Scottish Referendum mean for the Pound?

Scottish MP’s will likely vote next Wednesday on whether to hold a 2nd Scottish Referendum, with the timetable due to be confirmed later today. In the lead up to the last vote on 18th September 2014, and as polls started pointing towards the majority voting against independence, Sterling gained against the Euro by 2 cents, and then by another cent after the decision was announced. This difference provided our well informed clients with an additional €6,000 on a £200,000 transfer.

The concern now over Scotland holding another referendum is that, as every council in Scotland voted against leaving the EU, there could be far more appetite for Independence. Research has shown that bad news has a stronger effect (around double) on volatility in currency markets than good news. With this in mind, if another independence vote is approved, we could see a 6 cent loss for GBP/EUR potentially driving rates down to 1.08.

Detailing your requirements to your Account Manager here can help you to limit your exposure from what could be a very volatile period ahead.

In the meantime, economic data this week which could impact Sterling rates include average earnings and employment data this morning at 9.30am. Then on Thursday the Bank of England announce their latest Interest Rate decision and although no change is expected, any hints to future monetary policy changes could cause volatility for Sterling exchange rates.

For more information on how the UKs withdrawal from the EU, or Scotlands Indyref2 could impact your foreign currency requirement, speak with a member of our team on 01494 725 353 who will be able to assist you with any questions.

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.