Investors are waking up to the risk of a British break-up. The pound sank to its lowest level in 10 months Monday after an opinion poll over the weekend showed supporters of Scottish independence gaining a slim lead for the first time.
Scotland votes next week on the fate of its 307-year union with England, and the prospect of years of political and economic uncertainty is slamming the pound and hitting stock markets.
Strong growth and rapid job creation had sent the British currency to a 6-year high of $1.71 as markets anticipated the first rise in interest rates since 2007. But politics has now come to the fore, and the pound has fallen nearly 6% from its peak. Most polls still suggest Scotland will vote to stay, but the risk of a messy divorce is clearly rising.
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