Pound jumps as Scotland set to stay in the U.K.
By
Reuters
A prototype of Britain's new 1-pound coin
LOS ANGELES (MarketWatch) - The British pound staged a solid rally early Friday, as projections show Scottish voters had decided to remain in the U.K.
The pound surged as initial results from the voting began to trickle in, rising as high as $1.6526, up from around $1.6400 when the polls had closed.
Sterling pulled back slightly, first as Glasgow - Scotland's largest city - showed a majority in favor of independence, only to rally back as projections from the BBC and Reuters showed a 'No' victory.
But some of the euphoria began to wear off immediately, with sterling easing back to $1.6464 ahead of the announcement of the official final results. Scotland votes to stay in U.K., projections show
Crédit Agricole strategist Adam Myers had predicted a win for the pro-U.K. camp, saying it would likely push the pound above its Sept. 1st close of $1.6605.
But, Myers wrote ahead of the result, uncertainty over promises by London for more Scottish autonomy if the region stayed in the U.K. would act to limit the upside for the currency.
'A Scottish 'No' is not a vote for the status quo, and as such, some uncertainty will remain, limiting gains,' Myers wrote.
Meanwhile, the Japanese yen also saw big moves Friday, with the dollar rallying to a fresh post-financial-crisis high of ¥109.16, compared to ¥108.62 late Thursday in North America. Falling yen is weaker tonic for Japan
RBC forex strategist Adam Cole said the yen's dive came 'with no obvious catalyst other than the markets' generally risk-positive tone' due to the Scottish referendum results. However, some reports also cited comments by Japan Prime Minister Shinzo Abe, who said he hopes to start discussion soon on a second hike to the national consumption tax.
Among other major pairs, the euro eased to $1.2910 from late Thursday's $1.2920. The Australian dollar bought 89.57 U.S. cents for a loss of 0.3% on the day, according to FactSet, while the greenback bought 1.0959 Canadian dollars for a 0.1% advance for the U.S. currency.
The ICE Dollar Index , a measure of the dollar against six rival currencies, fell to 84.272 from 84.2870. The WSJ dollar index which measures the dollar against a slightly larger basket, rose 0.1% to 76.64.
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