The results of a recently conducted poll which shows that Scottish voters are still considering independence from the United Kingdom has sent jitters through the FX market and pushed the U.S. Dollar broadly higher, however the Pound Sterling was able to regain some recently lost ground. The latest poll now shows a 53/47 split against Scottish independence (from the previous poll at 51/49 in favor of it).
As reported at 7:44 a.m. (EDT) in New York, the U.S. Dollar Index was trading higher at 84.257 .DXY, close to Tuesday’s 14-month peak. If the Index closes the week higher, that will be the ninth straight week of gains. The USD/JPY was trading higher at 107.1050 Yen, not far from the session peak at 107.16 Yen. The NZD/USD slid to 0.8181, off the session low of 0.8162; the Kiwi is poised for further declines after the Reserve Bank of New Zealand talked the currency down, saying that the Kiwi Dollar was trading at a level which was both unjustified and unsustainable.
Possible Consequences of UK Break Up
Though diminished, the prospect of Scotland’s departure from the United Kingdom has the UK’s government and business leaders up in arms, with many warning of the likely consequences of a break up. Both the Royal Bank of Scotland and the Lloyds Banking Group which is also headquartered in Scotland, have said that they would pull up stakes there and relocate to England. Mark Carney, the governor of the Bank of England, issued his own warning and dismissed Alex Salmond’s pledge of a “currency union,” noting that that would not be compatible with sovereignty.