GBP/USD: Impact of the Scottish elections to be very limited – ING

In the view of the analysts at the ING bank, the GBP/USD pair is likely to show a limited reaction to the Scottish elections.

Key quotes

“The renewed focus on the question of Scottish Independence ... voters are now more 50:50 on the issue, erasing a previous lead for 'Yes' that had built up through the pandemic. 

“The main question ...  is whether the Scottish National Party (SNP) manages to gain an outright majority in the Scottish parliament, though there is a possibility of a coalition with the pro-independence Green party if they don't.

“The upshot is a formal request for a second independence referendum is likely over the next few years. 

“We expect the impact of the Scottish elections on GBP to be very limited. Regardless of the result, most don't expect an imminent vote on independence.”

“Given a second referendum (if one happens) is probably years away, there's limited need for such a risk-premia to be priced into sterling. GBP currently trades cheap vs EUR, also suggesting limited downside.”