Friday preview: Referendum result due at 7am, BoE on 'stand-by'

Rather politely, there is a dearth of major macroeconomic news and planned company announcements due on Friday, as Scotland's independence referendum result is delivered.

The final opinion polls before voting gave the 'no' vote a narrow, but consistent, lead.

Voting closes around 22:00 GMT on Thursday night, barring any delays, which are quite possible on this vote of unprecedented turnout in the UK.

The final result will formally be announced "around breakfast time" on Friday, according to the counting office, when the ballots from all 32 of Scotland's local councils are received by the chief counting officer, a certain Mary Pitcaithly, whose name will become quite well know in coming hours.

Results are likely to start coming through from around 01:00 GMT on the Friday, but Scotland's biggest cities, including Glasgow, Edinburgh and Aberdeen may not report results until around 05:00 GMT.

Unlike the general election, the result should more quickly become clear before every last ballot paper has been counted, as either side needs just 50% plus one vote of the total turnout.

Glasgow is the largest council area, with its results due around 5am, followed by Edinburgh at the same time, with large counties of Fife, North and South Lanarkshire, with Abderdeenshire due last at around 6am.

Jasper Lawler, analyst at CMC Markets UK, pointed out that with first regional outcomes starting be released around 02:00 GMT and the last big results expected to be announced around four hours later, markets like foreign exchange "could well be making directional moves from 5-6am as some traders pre-empt the final confirmation".

"The widespread assumption south of Hadrian’s Wall, at least in the City, is that the Scots will vote 'no' to independence purely to avoid the difficulties of the separation," Lawler said.

"The risk is that north of the border the feeling is that independence and self-determination in itself is worth the trouble. There seems to be a good amount of complacency in markets on the referendum result which could feed into a more exaggerated response if there is a ‘yes’ vote and perhaps a more muted one should it be a 'no'."

That the FTSE closed around 100 points from its high was an indication of this confidence, he suggested, either that or complacency.

Capital Economics said a 'no' vote "might have little market impact, but a shock 'yes' could trigger a surge in volatility and flight out of UK assets – at least until some of the many uncertainties have cleared".

The pound sterling, for one, has been particularly volatile in the run-up to the referendum, looking on track for its biggest one day gain against the US dollar.

A note from Daiwa Capital Markets summed up the predictions of many that a surprise 'yes' vote would likely trigger a fall in sterling.

"And it would usher in a period of significant uncertainty, as the details of eventual independence are negotiated between the Scottish and rUK [rest of UK] governments, and as fears about an eventual rUK departure from the EU would rise.

"A 'no' vote, conversely, would likely give a small lift to the pound. But it, too, will likely be followed by significant changes to the way the UK is eventually governed."

Further on sterling, those trying to out-think the markets by buying the pound on the basis of the maxim of "sell the rumour, buy the fact", should not expect the pound to rally after a yes vote, warned Ashraf Laidi, City Index’s chief global strategist.

"Those expecting the pound to end up rallying in the event of a 'yes' on the basis of 'sell the rumour-buy-the-fact' ought to think twice.

"A 'yes' vote would be a shock to say the least, and a resulting sterling plunge is inevitable," he said.

However, he added that any damage from a plunging sterling "would be allayed in the long run by a boost to England as a place of business, as Scottish banks and financial services firms seek refuge to the certainty of London. Scotland’s exit from the union could be seen to be relieving the UK Treasury of public finance burden to Scotland."

Bank of England contingencies

Also in the event of a surprise 'yes' decision, a notable warning was fired by Sir John Gieve, former Bank of England deputy governor at the Bank of England, that the BOE would have to be on alert against a possible run on Scottish banks similar to Northern Rock.

“I think they’ll be there very early [on Friday morning]; certainly there for the result” said Gieve.

“There’s bound to be some uncertainty, some possibility of deposit flight, some further marking down of the pound and the UK generally."

Governor Mark Carney has completed a 20-hour fly back from a G20 meeting of finance ministers and central bank governors in Cairns, Australia to be in attendance.

In the event of a yes vote, Carney would need to act quickly and make reassurements before the markets opened at 8am to attempt to prevent a run on sterling and the Edinburgh-based banks.

In such event, Carney would be anticipated to set out contingency plans to stabilise the financial system.

Carney has previously said that Scotland's desire to keep the pound is not compatible with sovereignty, whereas Scottish National Party leader Alex Salmond says the pound belongs as much to Scotland as it does to England.