Salient to Investors:

  • Currency trading suggests traders are dismissing the prospect of an upset “yes” in the September 18 referendum on  Scottish independence. Strategists say the pound’s peaks and troughs in 2014 reflect the prospect of the BOE becoming one of the first major central banks to raise rates.
  • Geoffrey Yu at UBS said traders believe there is a close to zero chance of the vote passing – so small it becomes hypothetical.
  • Callum Henderson at Standard Chartered said the little market reaction to the prospect of the Scotland referendum reflects an assumption that the result will be a ‘no’ vote.
  • Most polls reveal enough undecided voters to suggest that a large swing toward the nationalists could leave them victorious.
  • Nobel economists Joseph Stiglitz and James Mirrlees say an independent Scotland not being able to use sterling is a bluff by UK’s three main political parties. Mirrlees said a formal currency union would be an excellent arrangement, while Stiglitz recommends Scotland retain the pound.
  • Standard Life said in February it was preparing to shift business elsewhere should Scots vote for independence because of risks surrounding the currency and financial regulation.

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