Sunday, September 14, 2014

Scottish Independence and the markets

This time next week we will know the result of the referendum on Scottish Independence. We will also have seen the market's initial reaction.

This is completely unchartered territory - and no one can truly forecast what will happen following the result. Depending on who you read, if the 'YES' vote wins, there could be a run on UK assets, sterling will collapse, business and retail leaders saying that prices will rise etc etc.  I'm not a politician or an economist, and it seems to me that, more often than not, they are wrong in their predictions anyway. However, according to this report, in August there was the biggest outflow from UK capital assets since the height of the financial crisis in 2008.

While I have my own political and economic opinions or beliefs, these play no part in any of my trading decisions, other than an acknowledgement that, depending on the result, there may be a big move combined with a lot of volatility in the markets one way or another.

This is quite possible as the FTSE has gyrated with more volatility over the last week or two as people began to realise that the 'NO' result is not a foregone conclusion. Seemingly the markets have been moving up or down depending on whatever the latest opinion polls released have been saying.

It may be that, once the result is known, it may act as a catalyst for the start of a sustained move in one direction or another. As always, a trend follower will react to price action and any trends which may develop. Opinions or predictions will not be taken into account.

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