Intraday Market Thoughts

Late Bets Boost Cable, What to Expect Next

by Adam Button
Sep 18, 2014 22:55

Cable regained the 1.64000 figure, alongside all GBP pairs as polls closed in Scotland's independence referendum, with the  first poll from YouGov finding a 54% No, 46% Yes. The pound was a top performer on the day along with CHF after the SNB didn't introduce negative rates. The first referendum results could hit around 0100 GMT. In today's Premium Insights, we issued 2 new GBP trades with 2 charts ahead of ahead of the upcoming Scottish referendum announcement. NZDUSD, USDCHF and NZDCAD have all hit their final targets. Full trades & trades Latest trades & charts

Cable has inched back from as low as 1.6054 last week and a flurry of buying hit just hours before the results as the final polls showed a 4-6 point lead for the No side. The first referendum results are expected from Stirling at 0100 GMT which is believed to be a stronghold for separatists. If they do poorly there, the market will quickly price in a No victory.

At 0300GMT (0400BST)  results from the anti-separatist stronghold South Lanarkshire and independence stronghold of Dundee are due. If one side takes both, it's over.

By the time a final result is announced the 'buy the rumor and sell the fact' trade in cable could be underway.

If it remains close it could be a long night as ballot boxes arrive from remote areas. One of the late announcements will come from Aberdeen, which is a wealthy area and likely to tilt the balance back toward No if it's extremely close.  The final votes should be in by 0700 GMT but if it's still close then, the market will be running scared and cable in free-fall.

What was also notable Thursday was the paring of post-FOMC gains in the US dollar. Aside from USD/JPY, the US dollar took a break and all the gains against CAD and NZD have now evaporated.


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