Currency markets have sold sterling on news that the latest YouGov poll has revealed that the gap between the No and the Yes vote in the Scotland independence referendum has narrowed markedly. Currency markets are incredibly sensitive to uncertainty and a tight race in Scotland is offering us just that.

At the time of writing (04/09) the main UK currency pairs remain under pressure :

The pound to euro exchange rate: GBP converts into 1.2518 EUR.

The pound to dollar exchange rate: GBP converts into 1.6451 USD.

The pound to Canadian dollar exchange rate: GBP converts into 1.7947 CAD.

The pound to Australian dollar exchange rate: GBP converts into 1.7623 AUD.

PS: All quotes here are mid-market in nature; your bank will affix a spread at their own discretion when passing on currency. However, an independent FX provider will guarantee to undercut your bank's offer, in some cases delivering up to 5% more FX.

On Wednesday the release of the Services PMI from Markit dominated the agenda. A reading of 60.5 was delivered, well ahead of expectations for 58.5. If it weren't for the Scottish question we would be looking at some handy levels in GBP as a result of the data.

Scotland, Scotland, Scotland

The No vote still leads at 53% to 47% for the Yes vote, but that represents a narrowing of 8 points from the 14 point lead just a month ago. The required swing is getting dangerously small.

We have cited the referendum as being a key risk to GBP in September.

"Cable was badly beaten in morning London dealing today as concerns over the Scottish independence vote trumped the better than expected economic data from the construction sector," says analyst Boris Schlossberg at BK Asset Management.

Construction Sector PMI is Positive

Losses for sterling were somewhat minimised with the welcome release of better than expected construction sector data.

Construction PMI read at 64.0, well ahead of expectations for a reading of 61.4.

This will bost confidence amongst sterling bulls following on from the disappointing read that came from the Manufacturing sector on the previous day.

The GBP was undermined when it was shown to have hit a 14 month low at 52.5 for August. Forecasts were for 55.

Commenting on today's PMI, Markit, who conduct the survey say:

"A steep increase in construction output reflected strong contributions from all three broad areas of construction in August. Residential construction posted the fastest rise in activity, despite the pace of expansion moderating slightly to a three-month low.

"Civil engineering activity increased at the strongest pace since March, while growth of commercial construction again held close to its fastest since the summer of 2007."

Furthermore:

"August data indicated a continued strong recovery in UK construction output, driven by sharp rises in

housing, commercial and civil engineering activity.

"A sustained upturn in workloads and widespread confidence towards the business outlook resulted in

another rapid upturn in employment numbers.

"Greater demand for staff also contributed to a survey-record decline in sub-contractor availability, as well as the steepest rise in rates charged by sub-contractors since the survey began in April 1997."