×

Pound hit by report Scotland will demand new independence vote

Sterling hit its lowest point against the dollar in two weeks on Monday, following a report that Scotland will ask for a fresh referendum on its membership of the United Kingdom.

Another bid for independence has been seen likely by some ever since the Brexit referendum, when a strong majority of Scots voted to stay as a part of the European Union.

A Scottish Saltire (C) flies between a Union flag (L) and a European Union (EU) flag in front of the Scottish Parliament building in Edinburgh.
Oli Scarff | AFP | Getty Images
A Scottish Saltire (C) flies between a Union flag (L) and a European Union (EU) flag in front of the Scottish Parliament building in Edinburgh.

The pound slid by 0.7 percent against the dollar early in the session and was also 0.5 percent lower against the euro.

The currency move came after a Times of London newspaper report wrote that, "Theresa May reportedly fears the Scottish government will call another independence referendum around the same time she triggers the formal Brexit process under Article 50 next month."

The paper offered that Prime Minister May could "reject the request and trigger a constitutional crisis or accept it and potentially imperil the future of the United Kingdom".

In a research note titled "GBP: Guess what's back, back again…" the research team at ING wrote Monday that the Brexit related risks and the reaction from Scotland, were putting the pound on the back foot.

It also said further downside to Sterling is possible.

"While a tail risk at this stage, given that those in Westminster are unlikely to cave in to any referendum calls at this stage, such risks are yet to be adequately priced into the currency," the note read.

ING said expect more "noise" about the Scottish referendum during the weekly Prime Minister's Question Time on Wednesday at midday U.K. time.