Sterling (GBP)
Monday morning has seen the Pound plummet across the board as an oversight from Prime Minister David Cameron ignited potential complications north of the border.
YouGov’s latest Scottish independence poll saw a surprise 51% majority vote for the secessionists causing traders to pull away from Sterling in droves. In response to the unforeseen result Chancellor George Osborne offered more autonomy on tax, spending and welfare in the hope of persuading Scots to vote for unity. Rather foolishly, an overconfident Cameron had previously vetoed a third ballot option for greater devolution feeling that the majority of Scots would prefer to remain part of the United Kingdom rather than risk the unknown.
Euro (EUR)
Following the shocking European Central Bank decision to loosen monetary policy; Eurostat confirmed that the Eurozone economy showed a distinct lack of growth at 0.0% in the second quarter. The soft Gross Domestic Product figure ignited concerns that the ECB will continue to introduce fresh stimulus over the next few months.
ECB President Mario Draghi has intimated that the latest interest rate cuts would be the last, but he is not afraid to embark on a full quantitative easing scheme if inflationary pressure heightens in the currency bloc. Despite the threat of further stimulus the Euro still managed to gain around a cent versus the Pound amidst concerns over the Scottish bid for independence.
US Dollar (USD)
Trader reaction to the latest YouGov poll on Scottish Independence saw the Pound to US Dollar exchange rate fall to a 10-month low; declining by over a cent. Economists have estimated that the value of Sterling could depreciate by around 3-5% if Scotland becomes independent due to contentious issues surrounding national debt, the use of the Pound and the North Sea oil reserves.
The worst US Non-Farm Payrolls score in eight months saw Sterling gain a little ground on Friday. The data showed that only 142,000 workers joined the American labour market in August, well below economists’ forecasts of a 230,000 gain. Additionally, in what could be seen as a sign of low morale amongst some of America’s unemployed, the US labour force dropped from 62.9% to 62.8%.
Canadian Dollar (CAD)
Once again the trader anxiety surrounding the Scottish referendum has seen the Pound slump to its lowest level since January against the Canadian Dollar.
Canadian economic data showed the country’s unemployment rate to be 7.0% but -11,000 people fell out of work during August. The data, however, was in line with analysts’ forecasts and so the effects were somewhat limited. The Pound to Canadian Dollar exchange rate did benefit a little from the latest US labour market data which pointed towards a continuation of the loose policy south of the border.
Australian Dollar (AUD)
A combination of the shock results from the Scottish independence Poll and the soft US non-farms report has seen the Pound to Australian Dollar weaken to a 10-month low. Positive Australian economic data results and the ECB loose policy triggered a bullish run for the ‘Aussie’ which has continued to trend high versus the majority of its major competitors.
New Zealand Dollar (NZD)
The Pound to New Zealand Dollar exchange rate declined by over a cent to a two-month low in response to investors pushing back their US rate hike speculations, and as they digested the increasingly strong possibility that Scotland will vote to leave the 307-year-old currency union.
South African Rand (ZAR)
The Pound to South African Rand exchange rate nosedived as traders reacted to the latest YouGov poll on Scottish independence. The Rand is likely to continue to appreciate against the Pound with a lack of domestic data to curtail the uptrend.
