The Euro (EUR) weakened against the Pound (GBP) on Thursday after the final IPSOS MORI poll for the Scottish Referendum showed that the Better Together campaign was leading its Yes to Independence rival by 53% to 47%.
With the Scottish people voting on whether the nation should leave the 300-year old United Kingdom the currency markets are watching events closely.
The Pound advanced as the markets are favouring a win for the No campaign. Concerns over the economic impacts of Scotland leaving the UK have previously seen the currency tumble against its peers.
The market shrugged off a report released by the CBI, which showed that Britain’s manufacturing sector is losing strength.
According to the report UK, factories have seen orders fall below normal levels and export orders were at their worst level since January last year.
The cause of the decline in orders was being blamed on geopolitical risks.
‘It may well be that the increased uncertainty resulting from current heightened geopolitical tensions particularly related to Russia/Ukraine are causing some big-ticket manufacturing orders to be delayed or even cancelled. In addition, weak Eurozone activity is clearly having a limiting impact on foreign demand for UK manufacturing goods, while the strength of the pound has not helped UK manufacturing exports,’ said Howard Archer from IHS Global Insight.
Earlier data, which showed that retail sales matched economist forecasts, was also offering support the currency.
Sterling advanced after the final polls ahead of the vote all showed a lead for the no campaign. According to a YouGov poll, 52% were in favour of staying within the UK whilst 48% were in favour of leaving. A separate Survation poll also showed a 53% lead for the No side whilst the Yes were on 47%.
Despite showing a lead for the better together campaign, investors remained cautious as the number of people undecided could potentially tip the balance in the favour of either side.
Sterling was also finding support from the release of the latest Retail Sales data, which came in as forecast by rising by 0.4%.
The increase was the biggest seen in four months and was aided by a surge in sales of vacuum cleaners.
The Euro meanwhile was under pressure after the European Central Bank (ECB) announced that it had only lent €82.6 billion to Eurozone banks, far less than economists had predicted. It suggests that the TLTRO programme will only have a limited impact on boosting credit availability in the euro area, stimulating growth and fighting deflation
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