Sterling rebounded mid-week as the likelihood of Scotland leaving the United Kingdom began to fade but could see further volatility before the official vote, analysts told CNBC.
A YouGov poll for the Sunday Times published over the weekend showed that the pro-independence 'Yes' vote had garnered 51 percent of support, sending the pound spiraling to a 10-month low of $1.6050 on Tuesday. However, the currency rebounded to $1.6190 in Asia early Thursday, as a spate of fresh polls indicated a 'No' vote is back in favor.
"We continue to believe that when push comes to shove on September 18, the majority in Scotland will vote to remain part of the U.K. The speed and velocity of the intraday rebound in GBP/USD suggests that many sterling traders share our view," said Kathy Lien, managing director at BK Asset Management.
On September 18 Scottish citizens will vote on whether they would like to be independent from the United Kingdom. A vote to break away would lead to negotiations on whether Scotland keeps the pound as its currency, threatening the monetary union.
Questionable poll results
Although poll results have triggered strong currency reactions, their validity is questionable. A Suvation poll for the Daily Record published Wednesday showed the 'No' vote was at 53 percent when discounting the 10 percent of people that haven't made up their mind, giving the pro-U.K. campaign a six point lead and contradicting the YouGov poll.
"U.K. polls are notoriously unreliable, especially about such binary issues as independence with voters saying one thing but often doing the opposite in the privacy of the booth," BK said in a note.