A gauge of future price swings for the pound against the dollar jumped by the most in almost six years as a survey showed support for Scottish independence is increasing before this month’s referendum.
The pound dropped to the weakest versus the dollar since March after a poll by YouGov Plc for the Times and Sun newspapers showed a narrower lead for those favoring remaining part of the U.K. Volatility in sterling rose 22 percent, the biggest one-day jump since October 2008. The U.K. currency stayed lower even after a report showed construction growth unexpectedly accelerated in August. Gilts declined for a second day.
“There is no doubt that the jitters ahead of the referendum are weighing on the pound, and the latest poll didn’t help,” said Jane Foley, a senior currency strategist at Rabobank International in London. “There is a general perception in the market that Scotland breaking away as an independent country will lead to a higher debt burden to the U.K. and that is negative for the pound.”
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