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Republican writing supporting the Yes vote in the Scottish Referendum on a mountain in West Belfast, Northern Ireland, Monday, Sept. 8, 2014.Peter Morrison/The Associated Press

Britain's currency faces a lengthy period of high volatility and sinking value after a poll put support for Scottish independence ahead of the union vote for the first time, traders warned.

The YouGov poll, published in The Sunday Times, triggered a massive sell-off of sterling and the value of Scottish companies. Currency strategists and economists at Barclays said the sterling could lose another 5 per cent to 6 per cent if the Yes side wins the Sept. 18 referendum.

The poll, excluding undecided voters, gave the Yes side 51 per cent of the vote, against 49 per cent who would vote No to leaving the United Kingdom. It marks a remarkable turnaround from the polls conducted last year, when the Yes vote stood at about 35 per cent and the three main Westminster parties dismissed the independence effort, led by Scottish First Minister Alex Salmond, as largely irrelevant.

But in the summer, support for independence has steadily climbed to the point that undecided voters will probably determine the outcome. The Scottish National Party, however, is prepared for a loss and some polls still put the No side in the lead. The Scottish government's Finance Secretary John Swinney told the BBC that "it's a pretty fair assessment that the Yes campaign still remains behind in general. … But the movement is in our favour."

Investors were spooked by the YouGov poll. By midday trading on Monday, sterling fell by more than 1.3 per cent against the U.S. dollar, later recovering somewhat for a 1.1-per-cent loss. The loss takes sterling to a 10-month low. Since the start of July alone, the currency has lost 6 per cent and many traders think more losses will come.

In a note published Monday, Jens Nordvig, head of currency strategy at Nomura Securities, recommended shorting sterling until the referendum. "We believe that the market has not fully priced the current risk of a Yes to the Scottish referendum and the momentum is certainly towards a greater possibility of a Yes vote as we approach the date," he said.

Barclays had a similar view. In a conference call on Monday, the bank predicted another big slide in sterling if Mr. Salmond triumphs and a "protracted" period of currency volatility after the vote. "What this does is open up a whole new can of worms," Barclays fixed income strategist Moyeen Islam said.

Barclays and other banks expect a long period of volatility because a Yes vote would signal the start of messy negotiations that could last a year and a half, or longer, whose uncertainties would dominate the economic and fiscal agenda in Scotland and the remaining parts of the U.K. The big debates would include determining Scotland's fair share of the British debt and whether that debt should be determined by population, gross domestic product or social spending; the division of assets and liabilities; and which currency an independent Scotland would use. Mr. Salmond is lobbying for a currency union with the U.K., but the British government has ruled out that scenario.

If Scotland cannot negotiate a currency union, it could decide to adopt the euro unilaterally, as Montenegro has done with the euro and Panama has done with the U.S. dollar. That scenario appears unlikely because Scotland would lose the backing of the Bank of England, meaning it would lack a lender of last resort. If that option were ruled out, it could try to join the euro – unlikely given the common currency's troubles – or create its own currency backed by its own central bank.

Barclays thinks the latter option is most likely, all the more so since it expects the Scottish economy to struggle under high debt and high budget deficits in its early years. An independent Scotland would have deficit of about 8 per cent – none of which would be funded by transfers from the U.K. – putting it among the highest deficits in the Western world. A Scottish currency could be devalued. Keeping sterling or adopting the euro would eliminate that option, forcing the new country to use a painful, Greek-style internal devaluation to make its economy competitive.

Barclays believes the Bank of England may delay increasing interest rates – its probable next move since the British economy is expanding rapidly – because of the volatility and economic uncertainty that would be produced by a Yes votes.

Shares of companies based in Scotland reflected the new investor fear. The banks with headquarters, or substantial operations, in Scotland suffered the most on the belief they would lose deposits immediately after a Yes vote. Lloyds Banking Group fell more than 3 per cent and Royal Bank of Scotland fell by a similar amount, as did Standard Life. Some Scottish industrial and energy companies lost 1 per cent to 2 per cent.

The Scottish banks reportedly have made contingency plans to shift their base to England if the referendum goes in the separatists' favour.

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 10:30am EDT.

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