Although there is already an abundance of uncertainty throughout European politics, the latest referendum developments underway in Scotland could complicate the Brexit outlook. After calling an independence referendum in 2014 which resulted in the majority of Scots voting to stay in the United Kingdom, the Pound has fallen upon reports that Scotland plans to call a new referendum in March. This coincides with the review being conducted by the House of Lords before approving the Government’s ability to trigger Article 50 and begin exit negotiations.
Besides complicating the Brexit outlook, it highlights the frayed relations between the country’s regions as the proposed exit initiation date rapidly approaches. The immediate reaction was a steep selloff in the UK Pound, with GBPUSD falling as much as 80 pips before recovering modestly back above the 1.2400 level.