Sterling remained under pressure throughout the day after a recent opinion poll showed that the yes vote had for the first time this year gained the majority among Scots. The results of the pole suggested that next week’s referendum could increasingly see the breakup of the UK. Sterling plummeted to a nine month low against the dollar as it shed over 1.3% since Friday’s close, trading towards 1.6100 early on before recovering somewhat to 1.618. Pressure on the pound owing to next week’s vote has seen the currency shed almost 6% against the dollar since the year-to-date highs seen in July.
The surprise shift in Scottish sentiment saw an extension of selling pressure into wider equity markets. With the YouGov poll now putting the independence campaign ahead by a thin margin, 51% for independence, the shift in sentiment was enough to see European stocks sell-off throughout the session, with the FTSE leading the move lower.
With the shock decline in Chinese imports prompting renewed speculation of further stimulus and last week’s decision to cut the ECB base rate catching many investors off guard the start of this week has thrown up yet another concern and we could see market participants pare back from significant risk in the coming sessions. Front month Brent futures have already started to show signs of the renewed risk aversion, trading below $100/bbl for the first time since June last year as it shed 1.2% throughout the day, compounding the previous week’s losses.