GBP/USD to strengthen this year, shrugging off specter of Scottish referendum – MUFG

FXStreet reports that in the view of economists at MUFG Bank, risks of Scottish independence are too far in future to have lasting impact on sterling.

“The SNP missed out on a majority by one seat winning 64 seats which was one seat better than they achieved at the last election in 2016. The SNP will now have to govern with the support from the other pro-independence Green party who won 8 seats. Together the pro-independence parties won a comfortable majority.” 

“The SNP will likely remain reluctant to hold an illegal referendum without Westminster consent, while the UK’s government refusal to hold another referendum could see public support for independence rise further. The likelihood of a second referendum should increase but it is not yet certain to be held and the potential timing remains unclear. It would though likely take at least a year at the earliest to pass legislation and hold a referendum.”

“With independence risk so far in the future, we do not expect the developments to materially alter our outlook for the pound to continue to trade at stronger levels this year supported by the robust UK cyclical recovery and vastly diminished Brexit risks.”