FTSE calm as Scottish independence vote gets underway

As the people of Scotland vote on whether or not to break the 307-old union, investors are expecting a no vote, but aren't certain.

by Elizabeth Anderson
Last Updated: 19 Sep 2014

As the campaigns on both sides of the Scottish independence debate reached fever pitch in the last few days before the vote today, the market response has been broadly flat.

Despite sterling falling more than 1% against both the dollar and the euro the day after a poll on 7 September suggested the yes camp had overtaken the no camp, the pound has remained flat since the start of September, falling just 1.7% overall.

It suggests investors are either starting to price in a no vote, or that the outcome is too close to call that traders are hedging their bets for now.

Investors have been aware of the referendum for months. But it has only been in recent weeks that they have started to factor in the possibility that Scotland might actually vote in favour of independence. The latest YouGov poll puts support for a no vote at 52% and those backing independence at 48% - excluding the 6% who are undecided.

If Scottish people do vote 'yes', it is likely markets and currencies will move considerably in the short term, with things not settling down until markets are confident they know what it means for the economy, companies and the UK currency.

Ollie Beckett, fund manager at Henderson Global Investors, said: 'I think they will vote 'No', but if they vote 'Yes', it will have a short-term impact on markets: it will bring uncertainty, sterling will weaken, Spanish bond yields will go up because of the increased risk to see Catalonia leave Spain, and other areas within Europe could say: 'We too want independence''.

This morning the FTSE 100 opened just 1.8 points higher at 6,782.7.

Meanwhile it has been reported that City workers will be drafted in for extra long shifts to start processing the result, which could come in at any time between 4am to 8am tomorrow morning.

Credit Suisse is among banks keeping its sterling trading teams in all through the night in London: 'Normally, they would hand over to their colleagues in the US and then on to Asia, but we will have these traders in overnight,' a spokesman told the Independent. 'It’s about being able to service clients effectively … as well as managing our own positions.'

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