By Josie Cox
The British pound plummeted to a near nine-month low Monday,
pressured by a poll over the weekend that showed that the number of
those favoring Scottish independence had eclipsed those opposing a
split for the first time since the referendum campaign began, with
just ten days to go until the vote.
Sterling dropped almost 0.9% in early trade to $1.6153, its
lowest since November last year, while the euro gained 0.8% against
the pound to GBP0.8015.
The latest YouGov poll released Saturday showed 47% of those
surveyed were now likely to vote "yes" to independence, while 45%
would likely say "no." The rest of the 1,084 voters polled Sept.
2-5 said they were undecided or wouldn't vote.
Paul Donovan, an economist at UBS, said that even if the
pro-unionists took the lead on September 18, the latest figures
raise the risk of what he dubs a "Québécois scenario"--a narrow
rejection of independence that leaves open a risk of a further
vote.
"We believe this would have implications for banking, gilts,
direct investment into Scotland--from overseas and the rest of the
United Kingdom--and sterling," he said.
Citigroup said in a note to clients that sterling could easily
slump to $1.56 in the event of a 'yes' vote.
Already last week, the currency came under severe pressure as
polls showed a narrowing of the two camps. Gilts underperformed
moderately and Scottish-domiciled companies, such as utility SSE
PLC and Royal Bank of Scotland Group PLC lagged behind some of
their European peers.
On Monday, London's FTSE 100 index was indicated opening
marginally lower. Both equity and government bond indexes are due
to open at 07:00 GMT.
Barclays currency strategists meanwhile, pointed out that
derivatives that protect users from sharp shifts in sterling are
increasingly in demand.
"The abruptness of the shift in one survey should be viewed with
caution, but nonetheless reinforces our long-held view that
Scotland's independence referendum is a serious event risk, not a
tail risk," they wrote in a note.
Write to Josie Cox at josie.cox@wsj.com