Scottish referendum results: Pound rallies after Scotland says 'No' to independence

 

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The Independent Online

London's financial markets rallied this morning following the victory for the No campaign in the Scottish referendum with the FTSE 100 Index up 50.63 points to 6869.92.

Banks were among the biggest risers as the news ended weeks of uncertainty, especially for those like RBS and Lloyds with headquarters north of the border. RBS climbed 3.4 per cent while Lloyds jumped 2.1 per cent. The pair will now not need to carry out their contingency plan of moving their registered offices down to London.

SSE also rose 3.2 per cent in early trading.

Brenda Kelly, at IG Index in London, who was among the thousands of London traders, brokers and analysts who had been working through the night at dealing rooms across London, said: "It has been a very busy night and we are seeing a very big relief rally in the pound."

She added: "The FTSE 100 is near 14 year highs already so we could soon be pushing to the 6930 all- time high from 1999."

The pound had been surging through the night to levels not seen since before the Sunday Times poll last week that wrongly predicted a Yes result.

Sterling first surged at 10.30 last night after a quasi "exit" poll predicted the No victory and it continued to rally through the night.

 

In New Zealand, Simon Coulter, a currency broker at Mahi FX, said: "It has been one of the busiest Asian trading sessions I've seen for many months, possibly years. The pound has been rallying really hard. There has been a mood of great relief for investors. This status quo result is seen as being good for the financial system."

While many analysts have said the economies of Scotland and the rest of the UK would not be damaged in the longer term by a split, investors were concerned about the prospect of months of uncertainty as the two countries negotiated the future of the currency, the Bank of England and other economically crucial factors.

The pound, which had been below $1.64 before the 10.30pm YouGov poll, shot up to $1.6444 within minutes of that prediction and spent the rest of the night bouncing higher at above $1.65 despite dipping after the Dundee and West Dumbartonshire results.

"It was after the Glasgow result that we have seen investors push the pound higher again," said Ms Kelly. "It's a massive relief rally coming in."

The pound's rally started yesterday afternoon as investors moved to price in a No vote. However, with the dollar also expected to trade strongly, some of its gains may tail off.

The coming weeks and months will see much wrangling over the powers Westminster will cede to the Scottish parliament but, as IG strategist Chris Beauchamp said this morning: "These are of importance primarily to politicians and less so to markets... For markets, the worry of Scottish independence is now off the agenda."

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