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What's the chief impact of Scottish independence on the Pound? - SocGen

FXStreet (Bali) - According to Societe Generale, the chief impact of Scottish independence on sterling will come not so much from the separation per se, but the heightened possibility that the UK (or rUK) would leave the EU.

Key Quotes

"The chief impact of Scottish independence on sterling will come not so much from the separation per se, but the heightened possibility that the UK (or rUK) would leave the EU. A Yes win in Scotland would surely give rise to deep- and wide-ranging uncertainties about UK political and economic policies, especially as we approach the May 2015 General Election. BOE rate expectations would also likely turn more dovish."

"All in all, we believe the uncertainties thrown up by Scottish independence and heightened fears of Brexit would cause the trade-weighted sterling to tumble 20-30%. The nadir would likely occur just after the 2015 General Election if it were to result in a Conservative-led government, especially a Conservative-UKIP coalition. The overall shock to sterling from a Yes vote could thus be of a similar magnitude to the 2007-2008 financial crisis."

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