London Daily

Focus on the big picture.
Friday, Jun 19, 2026

Pound falls to lowest level since COVID crash after Nicola Sturgeon claims 'mandate' for Scottish independence referendum

Pound falls to lowest level since COVID crash after Nicola Sturgeon claims 'mandate' for Scottish independence referendum

"The UK has huge imported energy inflation and it is getting hit on both sides - from oil prices going up and sterling weakening," says Fahad Kamal, chief investment officer at Kleinwort Hambros.

The pound has fallen to its lowest level against the dollar since the onset of the pandemic, fuelled by concerns about the economy and the prospect of a second Scottish independence referendum.

Scotland's First Minister Nicola Sturgeon said earlier that her government had an "indisputable mandate" for another vote and was ready to set out more details of how this could be achieved without the approval of the UK government.

Sterling dropped below $1.20 for the first time since March 2020 - a drop of more than 1.2% on Tuesday.

When compared with the euro, the pound slumped 1.2% to 86.81p, its lowest point since last May.

"If I were to isolate the move lower down to one event, I'd most probably say that the Scottish independence risk was the straw that broke the camel's back," said Simon Harvey, head of FX analysis at Monex Europe.

Since the beginning of the year, sterling has fallen more than 11% with much of that decline attributable to a strong dollar - a safe haven for global investors in times of economic shock.

However, concerns about UK growth - tipped to be weaker over the coming months than in most rich countries - has added to the gloom for the currency.

There is added uncertainty about how fast the Bank of England can increase interest rates - which is needed to control soaring inflation - without causing economic damage.

Fahad Kamal, chief investment officer at Kleinwort Hambros, said the possibility of a new Scottish independence vote was "really bad news across a number of things".

"The UK has huge imported energy inflation and it is getting hit on both sides - from oil prices going up and sterling weakening," he said.

"It is putting Britain on a dangerous inflation trajectory and there is very little the Bank of England can do."

Typically, a fall in the value of sterling makes imports even more expensive, potentially contributing to inflation further.

Data released by the Office for National Statistics earlier this week unexpectedly showed that the UK economy contracted by 0.3% in April.

Newsletter

Related Articles

0:00
0:00
Close
Payment Fraud Losses Reach £1.28 Billion and Raise National Security Concerns
Lending to Small Businesses Climbs to Highest Level Since Late 2024
Middle East Conflict Clouds UK Economic Recovery Despite Strong First-Quarter Growth
Bank of England Moves to Simplify Capital Rules for Smaller Lenders
UK Government Fast-Tracks National Security and Cyber Resilience Legislation
Ofcom Investigates Telegram Over Alleged Role in Organising Arson Attacks
MPs Press Fujitsu to Speed Compensation for Post Office Horizon Victims
Bank of England Delays Final Basel III Implementation Changes to Support UK Banking Competitiveness
Pound Falls as Political Uncertainty and Bank of England Signals Weigh on Markets
0Andy Burnham Wins Makerfield By-Election and Emerges as Main Challenger to Keir Starmer
Dorset Council Tests AI Tools to Streamline Local Planning Applications
UK Researchers at Kew Gardens Use AI to Speed Up Identification of Threatened Plant Species
UK Gilt Yields Ease Toward 4.8% as Inflation and Labour Market Data Weigh on Bonds
Bank of England Data Shows Resilient SME Lending Despite Economic Slowdown
UK Finance Reports Weakening Services Activity as Business Confidence Softens
UK Introduces Mandatory Internal Complaints Process Under Data Use and Access Act
Bank of England Governor Andrew Bailey Flags Geopolitical Uncertainty as Key Risk to Inflation Outlook
Bank of England Holds Interest Rates at 3.75% as Policymakers Signal Cautious Stance on Inflation Risks
Cornwall Clergy Raise £40,000 for Church Repairs Through Everest-Themed Charity Challenge
UK Business and Social Landscape Reflects Strain From Geopolitical and Domestic Pressures
Tensions Grow in UK Over Sikh Kirpan and Religious Symbolism in Public Debate
Energy Price Cap Increase Set to Lift UK Household Bills by 13 Percent
University of Reading Ranked 196th in QS World University Rankings
UK Maritime Archaeologists Identify 17th-Century Dutch Shipwreck Off Devon Coast
Oxford Union Islam Debate Sparks Protest From Faith Leaders in UK
UK Social Cohesion Debate Intensifies After Religious Prejudice Survey Findings
UK SME Lending Rises Despite Geopolitical Uncertainty and Cautious Outlook
Foreign Demand for UK Gilts Remains Sensitive to Global Inflation Trends
Labour Party Faces Leadership Pressure After Weak Local Election Results in UK
Transport Costs Drive Inflation Pressure as Petrol Prices Push Up UK CPI
British Chambers of Commerce Cuts Growth Forecast as Middle East Conflict Weighs on Investment
UK Economy Grows 0.6 Percent in First Quarter but Outlook Remains Weak
Bank of England Holds Interest Rates at 3.75 Percent as Inflation Risks Persist
Energy Price Cap Rise Expected to Keep UK Inflation Above Target Through 2026
Health Authorities Warn of Rising Cases of Seasonal Respiratory Illnesses
BAE Systems and Rolls-Royce Advance Multi-Nation Fighter Aircraft Programme
National Archives Publish Declassified Documents on Cold War Energy Security Planning
British Retail Spending Rises Despite Continuing Cost-of-Living Pressures
Wales Launches Social Housing Pilot to Address Affordability Pressures
British Energy Companies Commit £5 Billion to Geothermal and Hydrogen Projects
Northern Ireland Debates Cross-Border Healthcare Partnership With the Republic of Ireland
UK Establishes National Artificial Intelligence Safety Centre With Leading Universities
UK Reports Decline in Small Boat Crossings After Expanding Intelligence Cooperation With France
Scottish Parliament Launches Inquiry Into Delays to Renewable Energy Projects
National Crime Agency Dismantles Alleged Multi-Million-Pound Money Laundering Network in London
Transport Strikes Disrupt Rail and Bus Services Across Northern England
United Kingdom and European Union Open New Security Dialogue on Defense and Border Cooperation
Bank of England Holds Interest Rates at 5% as Services Inflation Remains Elevated
UK Government Unveils Major National Health Service Reform Focused on Decentralization and Performance Funding
Government Advances New Airport Slot Rules to Ease Airline Operating Constraints
×