Beautiful Virgin Islands

Friday, Apr 03, 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

Beautiful Virgin Islands
0:00
0:00
Close
Trump’s Strategic Pressure on UK Seen as Push for Stronger Alignment and Fairer Terms
UK Focuses on Trade Finance to Secure Critical Materials for Defence and Energy Sectors
Majority of UK Businesses Hit by Middle East Conflict While Confidence Holds Firm
UK Royal Navy Faces Renewed Scrutiny as Debate Intensifies Over Capability and Readiness
Reform UK Faces Mounting Distractions as Policy Agenda Struggles to Gain Traction
Investigation Launched Into Northern Cyprus IVF Clinics After UK Families Receive Incorrect Sperm
International Meeting Issues Unified Call to Safeguard Navigation Through Strait of Hormuz
Potential Strait of Hormuz Closure Raises Concerns Over UK Food and Medicine Supply Chains
UK Leads Coalition of Over Forty Nations Urging Iran to Reopen Strait of Hormuz
UK Secures Tariff-Free Access for Medicines in Landmark US Pharma Trade Agreement
King Charles III Invited to Address Joint Session of U.S. Congress in Rare Diplomatic Honor
Debate Grows Over Whether Expanded North Sea Drilling Can Reduce UK Energy Bills
UK Faces Heightened Risk of Jet Fuel Shortages, Airline Chief Warns
UK Ends Police Investigations into Lawful Social Media Posts After Review Finds Overreach
Abramovich Moves to Establish Charity for Frozen Chelsea Sale Proceeds Amid UK Dispute
Starmer Reaffirms NATO Commitment While Responding to Trump’s Strategic Critique
UK Aid Reductions Raise Fears of Severe Human Impact Across Parts of Africa
UK Signals Renewed Push for EU Cooperation as Iran Conflict Reshapes Security Landscape
Bank of England Signals Caution as Bailey Advises Markets Against Expecting Rate Hikes
UK to Convene Global Coalition to Restore Shipping Through Strait of Hormuz
Trump Signals Possible NATO Reassessment, Emphasizes Stronger U.S. Strategic Autonomy
Australia Joins British-Led Efforts to Reopen Strait of Hormuz Amid Escalating Tensions
King Charles Plans US State Visit as UK Strengthens Ties with Trump Leadership
UK Regulator Launches Investigation Into Microsoft’s Business Software Practices
Kanye West Set for High-Profile Return to UK Stage at Wireless Festival
Trump Presses Europe to Strengthen Commitment as Iran Conflict Escalates
UK to Deploy Additional Troops to Middle East Amid Rising Regional Tensions
UK Authorities Face Claims of Heavy-Handed Measures in Monitoring Released Pro-Palestine Activists
Trump Calls on UK to Secure Its Own Energy as Iran Conflict Intensifies
Nigel Farage Declines Invitation to UK Conservative Conference Led by Liz Truss
Trump Warns Allies to Take Responsibility as Rift Deepens with UK and France Over Iran Conflict
How Britain’s Prime Minister Controls U.S. Bomber Access in Escalating Iran Conflict
Trump Urges Allies to Secure Their Own Oil Supplies as Hormuz Crisis Disrupts Global Energy
Russia Expels British Diplomat as UK Pushes Back Against Pressure
White House App Faces Scrutiny After Claims of Continuous User Location Tracking
BBC Faces Scrutiny Over Allegations of Paid Content Linked to Saudi Arabia
UK-France Coastal Patrol Agreement Nears Breakdown Amid Migration Pressures
UK Police Detain Pro-Palestine Activist Again Weeks After Bail Release
FTSE 100 Advances as Energy and Mining Shares Gain Amid Middle East Tensions
Eli Lilly Seeks UK Pricing Deal to Unlock Renewed Pharmaceutical Investment
Three Arrested in UK After Massive Cocaine Haul Discovered Hidden in Banana Shipment
UK Fuel Prices Poised for Further Surge Amid Global Energy Pressures
Apple Subsidiary Penalized by UK Authorities for Breach of Moscow Sanctions
Western Allies Intensify Coordinated Sanctions Strategy Against Russia
UK Lawmakers Face Criticism Over Renewed Push for Social Media Restrictions
Starmer Signals UK Crackdown on Addictive Social Media Features
Rising Costs Push One in Five UK Hospitality Businesses to the Brink of Closure
Man Arrested on Suspicion of Attempted Murder After Car Strikes Pedestrians in UK, Injuring Seven
Escalating Conflict Involving Iran Tightens Fiscal Pressures and Highlights UK Economic Vulnerabilities
UK Moves to Confront Russian ‘Shadow Fleet’ Operating in Its Waters
×