Pound regains lost ground as latest polls put No vote back in lead

The IMF entered the debate over the potential break up of the Union, warning that a vote by Scots for independence could raise many questions and upset markets in the short term.

The vote on September 18 “will raise a number of important and complicated issues that will have to be negotiated”, said IMF spokesman Bill Murray.

“The main immediate effect is likely to be uncertainty over the transition to a potentially new and different monetary, financial and fiscal framework in Scotland,” he said.

“While this uncertainty could lead to negative market reactions in the short term, the longer term will depend on the decisions being made during the transition, and I do not want to speculate on this.”

Despite conflicting opinion poll results and a major push by David Cameron north of the border, investors remain nervous over the final outcome as both sides enter the final week of campaigning.

James Stanton, deVere Group’s head of foreign exchange, said: “It is, without question, the uncertainty over the outcome of Scotland’s vote for independence that is fuelling the current flight out of sterling. This is uncharted territory and, as such, investors are uncertain about the longer-term economic outlook and financial framework of an independent Scotland and a split union.

“Therefore they are hedging risk by splitting asset classes, including currencies. This is a typical and understandable response in times of uncertainty. However, I expect that this trend will diminish after next Thursday’s vote.”

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