The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
Scottish referendum driving GBP/USD lower
Monday, like the previous Monday, saw European currency traders reassessing the risk of Scotland becoming an independent country and the implications it would have on the Pound. The weekends poll saw the ‘Yes’ vote for independence take the lead for the first time, something only a couple of weeks ago would have been seen as unthinkable.
This morning has seen GBP/USD floating some 500 pips lower than where it closed the previous month. In just over two months the cable rate has now dropped over 1000 pips, and this morning it is some 6.35% lower than its year highs set at the beginning of July.
So where now for the heavily oversold GBP/USD? Certainly the $1.60 level is a physiological level of support that also coincides with the 100-week moving average.
Under normal circumstances the fact that Bank of England governor Mark Carney is speaking today, in Liverpool at 11.45am, would be cause for currency-market caution, but developments in Scotland could continue to drive the markets.