Yesterday a High Court ruling confirmed that only the parliament and not the government has the power to trigger Article 50 and therefore a parliamentary vote will be required before Article 50 is activated. The UK government will appeal the verdict and it will now go to the Supreme Court in December for review.

If upheld in December, this would lean towards of softer Brexit as the majority of parliament have a pro-EU stance. The second impact is that it will very likely delay the triggering of Article 50 due to the negotiations within parliament on agreeing the right deal. The pound has benefitted from the news as from a financial markets perspective a softer Brexit is favoured. We can expect further short term volatility in the pound as we get further news and twists.

Interest rates left unchanged

Yesterday the Bank of England left interest rates unchanged and shifted their bias from easing to neutral which again mildly favoured Sterling. The BoE will adopt a “wait and see” approach and only if economic data markedly dips, will we see a further rate cut. It is also very unlikely that we will see any movement towards a rate hike despite higher inflation given the ongoing Brexit uncertainties.

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* Information courtesy of Phil McHugh, Trading Floor Manager, Currencies Direct
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