Article 50 ruling sends pound soaring

Article 50 ruling sends pound soaring

Article 50 ruling sends pound soaring

The battered pound has clawed back nearly 3 percent GBP=D4 this week, rising on a ruling from England's High Court on Thursday that the government needed parliamentary approval to start the Brexit process. That ate into the pound's 15 per cent drop versus the dollar this year, the worst among major currencies.

Kathleen Brooks, head of research at City Index, said the ruling had pushed the pound to its highest level since the flash crash last month.

"We're seeing a bit of a relief rally now that the worst case scenario of a unilateral "hard Brexit" has been deferred, and markets can start focusing on other factors (like) the USA presidential election", said CMC analyst Michael Hewson.

The battered pound has clawed back 2.5 percent against the dollar this week GBP=D4 , with Thursday's court ruling adding to a run of political and economic developments perceived as positive by investors worrying over the economic fallout of Brexit. It earlier climbed to US$1.2494, the highest since Oct 7.

The British pound is on track for a sixth consecutive month of losses, and is poised for the biggest monthly decline since the United Kingdom voted to leave the European Union.

Sterling also climbed 1.03 per cent against the euro to 1.120, despite the Government's immediate announcement that it would appeal against the decision at the Supreme Court.

The U.K. currency surged upon belief the High Court ruling will delay or soften the terms of the nation's exit from the EU. "Given stronger growth and higher inflation, the case for further easing would be hard to justify".

British Prime Minister Theresa May had said that she meant to trigger Article 50 of the Lisbon Treaty, which begins a two-year countdown to the actual separation, by the end of March.

A panel of judges ruled Thursday that the government needs parliament's approval to start negotiations to exit the EU. The decision to maintain the key interest rate at a record-low 0.25 per cent was forecast by all but four of 60 economists surveyed by Bloomberg.

Sterling has climbed on speculation a United Kingdom high court ruling will delay or soften the terms of the country's exit from the European Union, and it received a further boost when the Bank of England said it was no longer expecting to cut interest rates again this year.

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