In early trading on Monday, February 27, the pound, the fortunes of which have flagged ever since June 24, lapsed a further 0.6 percent against the dollar.
A investor note issued by London Capital Group said while concerns about Scotland's future within the UK had existed ever since the referendum, this is the first time such anxiety has been reflected in the pound's value — and there will be a further "fundamental downshift" in the currency's standing if Scotland proceeded with a second independence referendum.
Analysts at LMAX Exchange Research & Analytics suggest the prospect "will need to be watched closely," and raises the possibility the Bank of England may even revise UK interest rates — currently held at a record low of 0.25 percent — down even further.
Analysis at Monex Europe indicates "hard" Brexit stories don't typically knock the pound as much as they did immediately following the referendum, a reflection of risk being factored in to the currency's price — but the downward move suggests a new Scottish referendum would indeed represent "another leg lower" for sterling.
Figures in the UK government have repeatedly made clear that another referendum will not be held — in February 2017, Defense Minister Sir Michael Fallon told Sturgeon to "forget it," and later that month Scottish Secretary David Mundell, told MPs there was "no set of circumstances" in which Scotland could stay within the EU following Brexit, the very motivation for Scottish secession from the UK.
However, analysts at ING Bank note credit rating agencies have identified the prospect as a key area of risk in the months ahead, meaning markets certainly consider a second independence referendum a very real possibility.
Robin McAlpine, director of think tank Common Weal, suggests a second independence referendum was always a very real possibility — in fact, he says a second go was "inevitable," and the only question was timing.
"It was clear that there would be another referendum five to 10 years after the first. Brexit has changed all that — you can say the result either nudged things in that direction, or was a shock that fundamentally changed the UK and made another referendum essential, but it was always going to happen. It's a clear demonstration that England and Scotland want different things," Mr. McAlpine told Sputnik.
Nonetheless, he plays down suggestions a vote will happen in the short-term, and suggests much of the talk and buzz around a second referendum is coming from unionist parties, a scare tactic to divert support to them in impending local government elections in Scotland. Still, he believes the Conservatives are in a tricky position.
"Westminster will absolutely knock back attempts to hold a referendum prior to Brexit, but they can't block it forever — following the referendum, the Secretary of State for Scotland and the Scottish Conservative leader both said it would be democratically unacceptable to prevent another vote indefinitely. Although, a delay arguably works in the SNP's favor — we need time to see what shape the UK's relationship with the UK takes," Mr. McAlpine added.
Adding to the UK government's woes, the case for the UK is "weak" post-Brexit, he believes — "let's keep together so we can isolate ourselves from the rest of the world."
Despite ministers' apparently steadfast intransigence on the issue, Mr. McAlpine suggests one way the government could get around the issue would be to allow Scotland to hold a non-binding, consultative referendum on the issue, which it could boycott — although that in itself could easily backfire, he feels, doing little to shore up positive attitudes towards the UK in Scotland.
This in itself is a key issue in both the Brexit and Scottish independence debates, as he acknowledges — "both sides know what they want, but not how to achieve it," he concludes, and it's not clear neither side "really knows what it's doing."
