Sterling moved higher this morning after the High Court ruled that the UK government did not have the power to begin EU divorce proceedings without a parliamentary vote.
The court's decision, which marked a victory for a group led by finance campaigner Gina Miller, sent the currency up to $1.2450, from below $1.23 before the ruling.
Ms Miller launched the legal challenge alongside other EU citizens, arguing a government move to trigger Article 50 without parliamentary approval would be unconstitutional.
The government, led by prime minister Theresa May, argued it had the authority to do so within its remit.
The case focused on whether, as a matter of constitutional law, the Crown, acting through the executive government of the day, was "entitled to use its prerogative powers to give notice under Article 50 for the United Kingdom to cease to be a member of the European Union".
The court, however, decided the crown had "no prerogative power" to effect a withdrawal.
The government is expected to appeal the ruling in the Supreme Court, queuing up months of legal wrangling between it and campaigners.
Mrs May has already indicated she would initiate negotiations to leave the EU by the end of March 2017.
Ms Miller is known as the founder of investment firm SCM Private and a staunch campaigner on fee transparency and investor protection.