London: The pound and gilts fell as investors bet a Supreme Court loss for UK Prime Minister Theresa May won’t derail the start of a process to exit the European Union.
The UK’s highest court ruled May needs to seek parliamentary approval to trigger Brexit, an expected decision that hands lawmakers a chance to try to amend the government’s stance. The judges ruled unanimously that legislatures in Scotland and Northern Ireland don’t get to vote on the Article 50 process, which could have delayed May’s end-March time frame.
Sterling extended losses to a low of $1.2438 after the announcement, and traded down 0.6 per cent at $1.2465 by 1054am in London. UK 10-year gilt yields rose three basis points to 1.39 per cent.
May has said she will trigger Article 50 by the end of March, and last week detailed her vision for a clean break with the EU by quitting its single market.
Though that effectively meant Britain would undergo the “hard Brexit” many investors have feared, May’s relatively conciliatory tone and the fact that she had removed a layer of uncertainty was interpreted as a positive by markets — sterling soared by 3 per cent on the day of the speech against the dollar.
“While the Supreme Court ruling that the parliament needs to approve Article 50 is probably in the price, should the Supreme Court rule that parliament needs a say in the exit strategy details, sterling could get a further lift,” said ING’s global head of EMEA research, Chris Turner.
“We are very bearish on sterling/dollar this quarter, but are wary that this week could see a correction into the $1.25-26 region.”
