Forex - Sterling slips as Scotland vote, Fed eyed

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Shutterstock photo

Shutterstock photo - - Sterling slipped lower against the dollar on Monday as investors looked anxiously ahead to the outcome of Thursday's referendum on Scottish independence and the Federal Reserve's policy meeting on Wednesday.

GBP/USD dipped 0.10% to 1.6249, but remained comfortably supported above the 10-month lows of 1.6050 struck last Wednesday.

Cable was likely to find support at around 1.6185 and resistance at about 1.6280.

The latest opinion polls on the Scottish independence referendum indicated that the outcome of the vote is too close to call.

Concerns over the prospect of a yes vote sparked a selloff in the pound last week after polls indicated that support for the yes vote had edged into the lead for the first time since the start of the pro-independence campaign.

Uncertainty over what currency an independent Scotland would use, as well as concerns over how much of the U.K. national debt it would take on have rattled financial markets.

Bank of England Governor Mark Carney warned last week that a currency union between an independent Scotland and the rest of the U.K. would be "incompatible with sovereignty".

Market sentiment was hit on Monday after data over the weekend showed that Chinese industrial output slowed sharply last month, while separate reports showed that retail sales and fixed asset investment also slowed.

Chinese factory production rose just 6.9% annually in August, the slowest increase since March 2009, down from 9.0% in July.

The weak data sparked concerns over a slowdown in the world's largest economy.

The dollar remained broadly stronger ahead of the upcoming Fed policy meeting amid mounting expectations for an earl hike in U.S. interest rates.

The Fed was expected to cut its asset purchase program by another $10 billion on Wednesday, which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.

Elsewhere, sterling gained ground against the euro, with EUR/GBP losing 0.28% to trade at 0.7946.

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