Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 19 September 2014 at 5:47 GMT

GBP 'to flourish' on Scottish No vote: Beecroft

Former managing editor, / Saxo Bank
  • Scotland votes against independence by clear majority
  • 1.6 million votes, 45% of turnout vote Yes, including Glasgow and Dundee 
  • GBPUSD hit 1.6525 during Asian trading – still up 0.38% at 1.6459 (06:08 GMT)

By Martin O'Rourke

It's official – Scotland has voted and the result is clearly in favour of staying in the United Kingdom by a clear majority of 55% to 45%.

Chairman of Saxo Bank Capital Markets Nick Beecroft said: "I'd now expect sterling to flourish, especially against the euro, given the UK's starkly superior economic performance and the fact that the Bank of England is now likely to tighten before Christmas, whereas the European Central Bank has embarked upon a deliberate attempt to weaken the Euro, and will shortly begin 'printing money'.

"Because the market was waiting for the referendum result, the wider market moves we have seen over the last few weeks have been somewhat attenuated. I 'd now expect full market sentiment to assert itself, with GBP and USD rallying further against euro and yen, equities higher as the sea of printed money increases on ECB actions, and USD rates higher, via a steeper curve, as it became clear the Fed is turning towards removal of accommodation. 

"As I expected, there was a high turnout and specifically a high turnout of over 60’s, who were always fervent ‘No's, " he added.

"In the end, [they] voted with their ‘heads', rather than their ‘hearts', i.e. although the atmosphere of nationalist fervour led them to tell pollsters they’d vote ‘Yes’, a hard look at the facts actually meant the cross went down next to ‘No’. (As was the case in Quebec in 1995)," said Beecroft.

"There was also a 'fashionability' factor that drove people to say they’d vote ‘Yes’, just as it drives some to say they’ll vote for UKIP in UK elections, whereas they’ll actually vote Conservative, and there are those who are embarrassed to say they’ll vote Conservative, saying they’ll vote for more left-wing parties, but actually they vote Conservative. "

"As the vote approached people became much more aware that ‘Yes’ might win, so apathetic ‘No’s’ came out of the undergrowth, as did ‘Don’t knows’."


UK prime minister David Cameron will welcome the Scottish No vote and the
likely boost for GBP after a shaky fortnight. Photo: Thinkstock
Martin O'Rourke Martin O'Rourke
GBPUSD at 1.6470 at 05:55 GMT, up 0.45%
Martin O'Rourke Martin O'Rourke
Sterling hit a two-year high against the euro during early Asian trading to rise to 1.2743 and is currently up 0.46% to 1.2748 at 06:17 GMT.
Adam Courtenay Adam Courtenay
What a shame I didn't retain my UK bank account...
Martin O'Rourke Martin O'Rourke
GBPEUR still bubbling along nicely, up 0.32% to 1.2730 at 10:17 GMT
Martin O'Rourke Martin O'Rourke
USD claws back all GBP gains overnight and in early morning trading. At 10:21 GMT, GBPUSD at 1.6393, down 0.02%.


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