Sterling plunges, dollar at 14-month high

Sterling plunges, dollar at 14-month high

8 September 2014, 14:03

On Monday the dollar was at 14-month highs against the basket of other major currencies, while the pound fell steeply as a new poll with and prospects for Scottish independence pressured the currency lower.

GBP/USD was down 1.30% to 1.6112, the weakest since November 21 from 1.6324 late Friday.

The selloff in the sterling was caused after an opinion poll over the weekend showed that Scottish pro-independence voters moved narrowly into the lead for the first time, compiling 51%, ahead of next week’s vote. Financial markets were hit by uncertainty over what currency an independent Scotland would use, as well as concerns over how much of the U.K. national debt it would take on.

The dollar pushed higher against the yen and the Swiss franc, with USD/JPY edging up 0.08% to 105.16 and USD/CHF rising 0.05% to 0.9314. The dollar remained firmer despite Friday’s disappointing nonfarm payrolls report. The U.S. economy added 142,000 jobs last month, disappointing expectations for jobs growth of 225,000. The unemployment rate ticked down to 6.1% from 6.2% in July as more workers left the labor force.

The euro was steady close to 14-month lows against the dollar. EUR/USD dipped 0.02% to trade at 1.2948, not far from last Thursday’s lows of 1.2919.

Economic confidence in the euro area deteriorated sharply this month data on Monday showed, despite the European Central Bank’s latest measures to shore up growth and inflation in the region. The Sentix index of investor confidence plunged to -9.8 this month, the lowest reading since July 2013, down from 2.7 in August. Elsewhere, the euro rose to three month highs against the pound, with EUR/GBP advancing 1.295 to 0.8035.

In Japan, data on Monday showed that the economy contracted by a larger-then-forecast 7.1% year-over-year in the second quarter, underlining concerns over the impact of a sales tax increase in April.

AUD/USD was down 0.32% to 0.9346, while NZD/USD slid 0.18% to 0.8312. USD/CAD added 0.23% to trade at 1.0904.

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