The Euro (EUR) to Pound Sterling (GBP) exchange strengthened to a 3-month high after a slight blip on Wednesday, the Euro to US Dollar (USD) exchange rate meanwhile remained at its lowest level in 14-months.
Sterling fell to fresh lows against most of its major peers as concerns continue to increase that Scotland will choose to leave the United Kingdom at next week’s referendum vote.
Uncertainty as to the impacts on the currency will be in the event of a yes to independence victory has continued to send it lower.
Investors are growing increasingly nervous ahead of the release of an eagerly anticipated Scottish opinion poll by Survation.
The poll is scheduled to be released at 10:30 pm GMT and the survey company has hinted that the results are ‘very interesting’.
The rumours over the poll sent the Pound to a 3-month low against the Euro. The currency declined to €1.243, its lowest level since mid-June.
Also weighing on the Pound were comments made by Bank of England Governor Mark Carney. He said that a currency union is “incompatible with sovereignty.” He also appeared to rule out an interest rate increase this year saying that rates could rise in the spring of next year.
The EUR/GBP exchange rate is forecast to remain volatile, as trading volumes of the UK currency have surged by 30% since a poll released on Sunday showed that the pro-Independence Yes campaign took the lead in the polls.
‘Until we receive a clear Yes or No vote, Sterling will pitch and yaw with the results of each opinion poll. Global investors are uncertain as to the longer-term economic prospects of an independent Scotland and a broken union, and we will continue to pressurise UK assets as long as this fear remains. If Scotland votes Yes next week, then the Sterling implications could be horrific,’ said World First’s Chief economist Jeremy Cook.
Against the US Dollar, the Euro remained under pressure at a 14-month low, as demand for the currency was heightened after recent data releases increased expectations that the Federal Reserve will raise interest rates earlier than forecast.
Investors are now turning their attention to next week’s Federal Reserve policy meeting.
The ‘Greenback’ could make further gains later in today’s session if the latest Mortgage applications data comes in strongly.
On Thursday the market will focusing on the latest inflation data out of Germany and France. A further decline will likely send the Euro weaker against the US Dollar and possibly give up recent gains against the Pound, as fears over deflation taking root in the Eurozone will rise.
UPDATE
The Euro surrendered most of Wednesdays gains against the Pound and declined back below the 0.80 level after an opinion poll released overnight showed that support for keeping Scotland as part of the United Kingdom retook the lead over the pro-independence campaign.
The new opinion poll showed that support for the no campaign took the lead with 53% of voters. Sterling also found support from comments made by Bank of England Governor Mark Carney who said that the UK’s interest rates would rise over the coming months.
Weighing upon the Euro was the publication of a report, which showed that inflation in Germany remained stuck at its lowest level in more than four years last month, heightening fears over deflation.
Euro Exchange Rate:
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,US Dollar,1.2947 ,
Euro,,British Pound,0.8025 ,
Euro,,Australian Dollar,1.4156 ,
Euro,,Canadian Dollar,1.4209 ,
[/table]
