In what was already going to be an eventful week for the UK, Nicola Sturgeon has thrown another, albeit expected, spanner in the works calling for another Scottish independence referendum leaving PM Theresa May with not only Brexit but also Scexit to contend with.
The announcement hasn’t come as a major surprise, with the SNP making their feelings repeatedly known since the EU referendum last June after the majority of the country voted to remain only to be dragged out kicking and screaming. What is confusing is the timing for the new referendum, with Sturgeon claiming that it should happen between Autumn 2018 and Spring 2019, prior to the two years of Brexit negotiations being completed.
This effectively means that even if the negotiations go perfectly to plan, which they likely won’t, the Scottish people won’t know what they will actually be voting for. It’s almost like Sturgeon wants the alternative to independence to be enormous uncertainty when the alternative could be cleared up months after the proposed date.
While all of this seems rather confusing, markets have broadly taken it in their stride. The pound, which had started the session well on hopes that parliament could have a vote on its on exit deal, saw some volatility immediately after the announcement but has since settled slightly higher. The uncertainty has hit UK Gilts slightly but even here, the impact has been minimal, albeit enough to send yields to session highs.