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Market uncertainty grows as poll points to possible Scottish yes vote - TD Securities

FXStreet (Łódź) - The TD Securities team of analysts comment on the possible consequences of a "yes" vote and of a "no" vote in Scotland's independence referendum scheduled for 18 September.

Key quotes

"The Sunday Times YouGov poll over the weekend became the first major poll to show a majority Yes vote in favour of Scottish independence, with a 51-49 margin excluding undecided votes."

"There are still significant uncertainties over the accuracy of polling in this situation that will likely leave significant uncertainty over markets right up through the September 18th referendum."

"Market reactions (cable down 1.5%, 2-5y area rallying 6bps, first BoE hike pushed back from Feb15 to May15) confirm our bias that cable is likely to underperform into the referendum, with a Yes vote likely triggering a further 2-3% fall, with a rally in 2s and steepening out the curve, with 10s more uncertain, and the market pushing back the BoE’s first hike by up to 12 months."

"In the case of a Yes vote, we would expect GBPUSD to trade in a range of 1.5450-1.5722 in the aftermath while Dec15 short sterling still offers value in the case of a Yes vote, while the nearer contracts are likely in the middle of their potential ranges."

"In the case of a No, EURGBP is likely to retrace as low as 0.7950."

"UK markets will now likely trade from poll to poll, with the next major poll from TNS BMRB potentially released Tuesday morning."

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