British Pound drops to 10 month low

I have been watching the build up to the Scottish vote for independence on 18 September with great interest. The previously unthinkable seems possible as polls and statistics seem to show the yes campaign for Scottish independence may be victorious. The implications of this are unknown but with the British pound sliding to a 10 month low against the dollar the uncertainty of the world on the implications of Scottish independence are showing. The British government has made it clear that should Scotland become independent it shall not be allowed to use sterling as its national currency, which certainly in my mind makes me wonder what will happen to the strength of the pound which in the past has always been kept by South Africans as a secure alternative to the Rand! – AC

The British pound slid to a 10-month low against the dollar Monday and shares in Scotland-based companies fell after opinion polls suggested the campaign for Scottish independence could be edging toward victory.

At one stage, the pound had fallen 1.4 percent to $1.6104, its lowest level since November. It clawed back some ground by midday trading in London but at $1.6130, the pound is still nearly 2 cents down on the day.

Shares in Scottish-based financial institutions such as Royal Bank of Scotland and Standard Life also took a hammering, falling around 3 percent.

For months, polls have put the anti-independence side ahead, but the gap has narrowed ahead of the Sept. 18 vote. A poll released Sunday put the pro-independence forces in the lead, albeit by just two points. Other polls give the No side a narrow lead.

The leader of the anti-independence "Better Together" campaign denied his forces were panicking as Yes campaigners claimed to have the momentum.

"I'm very confident we will win the day," said Alistair Darling, a former British Treasury chief.

He has been accused of running a negative campaign focusing primarily on the economic risks to Scotland of separation.

Scotland's pro-independence First Minister Alex Salmond says an independent Scotland would continue to use the pound, but the British government says it won't agree to that.

Analysts said that with 10 days to go, markets were waking up to the uncertainties of independence, which include Scotland's status in the European Union, its share of Britain's national debt and its stake in North Sea oil revenue.

Brenda Kelly, Chief Market Strategist at IG Group, said the markets were "beginning to price in what was deemed unthinkable" – the breakup of Britain.

The British government is preparing to offer Scotland more financial autonomy, including greater tax-raising powers, in a bid to slow the pro-independence surge.

Many Scots favor that option – known as maximum devolution, or "devo max" – but it is not on the referendum ballot, which asks whether Scotland should become an independent country.

A yes vote would end Scotland's 307-year-old union with England.