Sterling watchers looking North

• Referendum voting has begun, results due from 2am tonight

• Fed raise rate expectations but continue timing waffle

• Sterling gaining slightly on final polls showing lead for unionists

• ECB to release details of latest liquidity operations for Eurozone banks

The day of the Scottish referendum is upon us. Polls across the country have been open since 7am BST and will remain open until 10pm tonight. Voters will be asked the simple question of “Should Scotland be an independent country?” Unlike general elections, there will be no exit poll as the polls close and so it will only be at 2am this morning we should be starting to get the first results from the smaller voting regions with the larger metropolitan area reporting anywhere between 4am and 6am. By the time the sun rises tomorrow morning the result will be very much known to us all.

Last night’s final run of opinion polls showed the ‘No’ campaign continuing to eke out a slender lead. The final poll from YouGov, the same organisation whose poll 11 days ago showed a shock lead for the ‘Yes’ campaign, gave the unionists a 52-48 lead. Survation’s final poll released minutes later had the gap at 53-47.

Sterling is creating some gentle gains this morning across the board as investors make bets that the Union will remain past tomorrow’s dawn. As we have continued to warn, the downside to sterling from a ‘Yes’ vote will outweigh any retracement higher that a ‘No’ vote would bring. This is the biggest constitutional event that has occurred in the United Kingdom since the beginning of the Union; the uncertainty of the separation for both economies would be poisonous for sterling assets in the short term.

It seems that it is indeed the polls that are creating this sterling push higher. Nobody really wanted to be long of sterling yesterday even despite a strong employment report this morning. The jobless rate in the UK slowed to 6.2%, the lowest since 2008, and those claiming jobless benefits fell by 37,000 people in the month of July. Even wages outperformed expectations although remained way below inflation. Falling real wages does mean that wages are really falling of course.

The Bank of England minutes did not cause as much of a market ruction as last month’s did. Both McCafferty and Weale repeated their vote for a 25bps increase in the Bank’s base rate, with everyone else preferring to hold off. The majority were notably more dovish in their comments on the UK economy with fears over a lack of price pressures, increased downside risks and concerns about just how deep and protracted any new slowdown in Europe could be.

The Federal Reserve meeting overnight was notable for its appeal to both bulls and bears, doves and hawks. While the “considerable time” wording remained in the Federal Reserve’s statement we believe this is simply on the basis of giving the central bank a little more time. When asked just what “considerable time” meant Fed Chair Janet Yellen tap-danced like a pro and re-emphasised that there is no “mechanical” definition. As we have sometimes characterised the Bank of England’s forward guidance plan, this is “forward suggestion” at its finest.

Dollar has run higher, however, as rate targets portrayed in the Committee’s “dot chart” release showed a gradual increase in expected interest rates through 2015 and 2016. By the end of 2015 rates are expected to be around 1.375% in the US, up from 1.25% at the June meeting. The average for 2016 shifted to 2.68% from 2.53% in June. Calculating and allocating that back, that would suggest a 25bps increase as early as April in the US. We think this unlikely at the moment, however.

Inflation expectations were also revised higher and it is instead to these that we look. For all the chatter about the statement, and we are guilty of this, we must not forget that the economic data moving forward is the most important indicator. With the statement meaningless, the dollar has resumed its strengthening trend.

The Eurozone has a right to feel slightly left out this week given the news flow elsewhere, although today we will find out just how much cash Eurozone banks have borrowed from the European Central Bank’s new TLTRO liquidity plan. Expectations sit around the EUR150bn mark at the September allocation with a lower figure likely to weaken the single currency as it increases bets that the ABS QE plan is used heavily and that a push for sovereign QE is called for further. The numbers are due at 10.15 BST.

UK retail sales are due at 09.30, but outside of a major surprise, sterling watchers will continue to look to the North.

Have a great day.