Intra-Day Market Moving New and Views
22 Jul 2014 03:23GMT
GBP/USD - ... A Reuters report yesterday which should give sterling bulls food for thought:
Currency investors started to buy options on Monday that allow them to hedge against the possibility of a Scottish vote for independence.
This trend is likely to pick up in coming weeks, analysts said.
Scottish independence has been at best a slight risk for most money managers, with opinion polls still showing more than 50% of Scots want to remain part of the UK - far more than the third who want independence. Two-month implied volatility, which captures the Sept. 18 vote n the results n shows how sharp swings in a currency is likely to be, rose to around 5.2% from below 5% on Fri n 4.6% just a week ago.
Uncertainties include which currency an independent Scotland would use, membership of the European Union, sharing of North Sea oil revenues and whether the Scottish fund industry would move south, they said.
A number of banks have published reports in the past few weeks which highlight a prolonged period of sterling weakness if the Scots voted for independence. BNP Paribas analysts said that whether or not Scotland voted for independence, the referendum was likely to deliver a shock to sterling. "Even a 'no' vote will herald a new era, one that could spell uncertainty for sterling," they said. "A 'no' vote on Sept 18 will not be a continuation of the status quo in our view, given the push for devolution by the Scottish National Party." The SNP is leading the campaign for independence.
Morgan Stanley analysts said that a "yes" vote could cause sterling to slip by up to 10% on a trade-weighted basis , retracing its gains over the past year.
22 Jul 2014 03:23GMT
GBP/USD - ... A Reuters report yesterday which should give sterling bulls food for thought:
Currency investors started to buy options on Monday that allow them to hedge against the possibility of a Scottish vote for independence.
This trend is likely to pick up in coming weeks, analysts said.
Scottish independence has been at best a slight risk for most money managers, with opinion polls still showing more than 50% of Scots want to remain part of the UK - far more than the third who want independence. Two-month implied volatility, which captures the Sept. 18 vote n the results n shows how sharp swings in a currency is likely to be, rose to around 5.2% from below 5% on Fri n 4.6% just a week ago.
Uncertainties include which currency an independent Scotland would use, membership of the European Union, sharing of North Sea oil revenues and whether the Scottish fund industry would move south, they said.
A number of banks have published reports in the past few weeks which highlight a prolonged period of sterling weakness if the Scots voted for independence. BNP Paribas analysts said that whether or not Scotland voted for independence, the referendum was likely to deliver a shock to sterling. "Even a 'no' vote will herald a new era, one that could spell uncertainty for sterling," they said. "A 'no' vote on Sept 18 will not be a continuation of the status quo in our view, given the push for devolution by the Scottish National Party." The SNP is leading the campaign for independence.
Morgan Stanley analysts said that a "yes" vote could cause sterling to slip by up to 10% on a trade-weighted basis , retracing its gains over the past year.
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