Sterling steady as outright majority for Scottish nationalists seen unlikely

Pound at 1-week high, weak data fails to dent BOE rate expectation
Pound at 1-week high, weak data fails to dent BOE rate expectation   -   Copyright  Thomson Reuters 2021   -  
By Reuters

<p><body> <p>By Julien Ponthus</p> <p><span class="caps">LONDON</span> (Reuters) – Sterling was unchanged against the dollar on Wednesday morning as a poll showed Scotland’s main pro-independence party was unlikely to win an outright majority in Thursday’s election, a blow to its hopes for a referendum on separating from Britain.</p> <p>The Scottish National Party (<span class="caps">SNP</span>) wants a majority in the devolved parliament to demand another referendum, although British Prime Minister Boris Johnson has repeatedly said he will not grant one.</p> <p>For this reason, the impact of the election’s results on the British currency are expected to be fairly limited.</p> <p>“It is far from clear how we get to a second referendum, even under a landslide <span class="caps">SNP</span> victory and in the event of a referendum, the majority in favour of independence has largely disappeared with opinion now split 50/50”, wrote Adam Cole, chief currency strategist at <span class="caps">RBC</span> Capital Markets, in a morning note.</p> <p>Analysts at <span class="caps">ING</span> shared the same view. </p> <p>“We expect the impact of the Scottish elections on <span class="caps">GBP</span> to be very limited”, they argued adding that “regardless of the result, most don’t expect an imminent vote on independence”.</p> <p>While an independent Scotland appears to be a risk fairly far away on the horizon for investors, Britain’s monetary policy and its exit strategy from the massive stimulus launched to weather the impact of the coronavirus pandemic represents a more immediate concern.</p> <p>Policymakers of the Bank of England meet on Thursday when the central bank will publish its May Monetary Policy Report. </p> <p>“Traders are focusing more on the near-term risk of a more hawkish Bank of England than on the long-term risk of Scottish independence”, Marshall Gittler, head of investment research at <span class="caps">BDS</span>wiss, told his clients. </p> <p>“I expect the Committee to vote unanimously to keep Bank Rate and the total amount of bond purchase unchanged at <span class="caps">GBP</span> 895bn but to slow the weekly pace of bond-buying from its current <span class="caps">GBP</span> 4.4bn a week to around <span class="caps">GBP</span> 3.5bn or <span class="caps">GBP</span> 3.0bn”, Gittler said. </p> <p>At 0819 <span class="caps">GMT</span>, sterling was up just 0.01% at $1.3888 and rose 0.21% against the euro at 0.8632 pence.</p> <p/> <p> (Reporting by Julien Ponthus; Editing by Kim Coghill)</p> </body></p>