As a momentous week winds down the sterling has regained its stability after a wild finish to yesterday's Scottish independence vote. The sterling had dropped as low as 1.6052 in the days before the referendum as the separation vote seemed to gain.
The British currency opened yesterday's trading at 1.6276 and ranged as high as 1.6409, anticipating the anti-independence victory as indicated by several late polls. As the defeat of the independence cause became clear the pound rose in several waves as high as 1.6524. But in a classic case of buy the rumor and sell the fact, profit taking drove it down first to 1.6450 in Europe and then steadily lower throughout New York trading to 1.6296.
The cable is holding at 1.6313, in late NY trading, in the middle of the day's range of 1.6296 (US) to 1.6525 (Asia). The interest rate comparison between the US and UK remains the same, each central bank is moving towards a tightening cycle while ECB is being pushed towards more policy accommodation by moribund economic growth, deflation and unemployment.
US GDP is likely to be stronger than the UK's over the next two years, as it is largely free of the negative influence of the EMU.