World Economy

Pound Annihilated on Scottish Poll News

 Pound Annihilated on Scottish Poll News Pound Annihilated on Scottish Poll News

The British Pound was dumped across the board in the early stages of inter-bank trading, following weekend poll results that show Scottish independents leading the referendum by a narrow lead.

Supporters of Scottish independence have taken their first opinion poll lead since the referendum campaign began, according to a YouGov survey for the Sunday Times newspaper, FXStreet reported Monday. 

The pound fell early in late Sunday trading, and it continued to be hammered early Monday.

It's unclear what economic ramifications there will be if Scotland does go, but, it's a safe bet that it won't be smooth, and so traders are dumping the pound right now, as a show of concern.

Meanwhile, the latest weakness in the pound is part of an accelerating trend, as the YES campaign has steadily risen in the polls in recent weeks.

With less than two weeks to go before the Sept. 18 vote, the poll puts the "Yes" to independence campaign on 51 percent, with the unionists on 49 percent, overturning a 22-point lead for the unionist campaign in just a month.

GBP/USD took a big hit (150 pips gap lower), breaking through critical support area at 1.6230, reaching its lowest level since late Nov last year at 1.6167 before bargain hunters made their appearance at the open of the retail platform at 21GMT. 

EUR/USD kept being pressured, threatening a break of 1.2920 again, currently at 1.2936 session low. 

AUD/USD opened with a 15 pips down-gap, but saw solid demand off lows again, keeping the currency in a tight 0.9360-75 range. 

Meanwhile, USD/JPY tested 105.20 offers, but no follow through was found, resulting in a consolidation marginally above 105.00. 

NZD/USD traded in familiar ranges centered at 0.8320 ahead of Thursday's RBNZ monetary policy decision. 

No Ifs, No Buts

On the fundamental front, plenty of headlines to chew on. Out of the UK, Chancellor Osborne was quoted as saying that "no ifs, no buts, we will not share the pound if Scotland separates from the rest of the UK." 

Meanwhile, the Royal Bank of Scotland has launched a public share sale of part of its US subsidiary, Citizens Bank.

The bank said it planned to sell 25% of the shares at a price between $23 and $25 a share each, potentially raising up to $3.5b.

RBS bought Citizens for $440m in 1988 and subsequently turned it into one of the biggest regional banks in the US.

Since being bailed out by the UK government in 2008, RBS has been under pressure to sell its foreign holdings.

Chief executive Ross McEwan said the sale marked an "important milestone" for both RBS and Citizens.

"The [sale] will significantly improve RBS's capital foundation and is a further important step in making RBS a strong and secure bank," he added.