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UK currency slips as Scottish independence gains in polls

The pound slid to the weakest level since November versus the dollar as opinion polls highlighted the risk Scotland will vote for independence next week, potentially splintering the United Kingdom's 307- year-old union.

Britain's currency, the pound sterling, dropped the most in more than a year against the U.S. dollar after a poll by YouGov Plc showed the Scottish independence campaign gained a lead for the first time this year. Financial companies with ties to Scotland helped drag U.K. stocks lower.

"The market looks to be absorbing wave after wave of sterling selling with no appreciable bounce, and to be honest, why buy it?" said Graham Davidson, a foreign-exchange trader at National Australia Bank Ltd. in London. "If they were to vote 'Yes' [to independence] then sterling could drop another 10 percent."

The pound slid 1.2 percent to $1.6140 at 5:54 p.m. London time and had its biggest one-day decline since July 5, 2013. Sterling tumbled 1.1 percent to 80.22 pence per euro.

Following months of surveys that showed Scotland was unlikely to vote to leave the U.K., the latest results have roiled the currency market.

The question of whether a go-it-alone Scotland will be able to keep the pound in partnership with the remaining parts of the U.K. has dominated the independence debate with all the major parties in London saying they would oppose it. Scottish First Minister Alex Salmond has argued they would change their view once negotiations began in the event of a "Yes" vote. He said Scotland would refuse to pay its share of the U.K. national debt if they didn't give in. Sterling is the fourth-most-traded currency globally.

"The referendum is on a knife edge," said Nick Stamenkovic, an Edinburgh-based fixed-income strategist at broker RIA Capital Markets Ltd. "Markets have been too complacent but are now waking up to the increased risk of Scotland voting for independence."

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