The value of sterling has risen after the UK Supreme Court ruled the Prime Minister's decision to prorogue parliament was illegal.
The court delivered its unanimous verdict this morning (24 September), saying "this was not a normal prorogation" and there had been "no justification" for the suspension of parliament.
Boris Johnson called for the suspension of parliament for five weeks in September ahead of a Queen's Speech scheduled for October 14.
But critics say he did so to effectively silence MPs ahead of the Brexit deadline on October 31.
Following this morning's news the pound rose about half a percentage point against the dollar.
Andy Scott, associate director at JCRA, a risk advisory firm said: "The market reaction to the Supreme Court ruling was somewhat muted, with sterling rising less than half of one percentage point against its major counterparts.
"The limited gains for sterling reflect that today’s ruling doesn’t change the difficulty in securing a Brexit deal before next month’s EU summit, or the fact that an election looms that could result in a hung parliament.
"Political uncertainty remains elevated and will keep investors cautious over the direction of sterling.
“The recent recovery in sterling - which has risen by four percent versus the dollar and five percent versus the euro since hitting its lowest levels since 2016 - reflect an easing of hard-Brexit fears."
Edward Park, deputy chief investment officer at Brooks Macdonald, said the market has interpreted the decision as having the effect of making a no deal Brexit less likely, but this will not prompt him to change his view of the investment case for UK market.
He said: “This latest twist in the Brexit narrative likely delays the decision point for Brexit but does not make it any clearer whether the UK will leave with a deal, without a deal or not at all.
"As a result we retain our existing underweight to UK assets and where we do have exposure it is focused on large UK multinationals that have an inbuilt currency hedge against sterling volatility.
"All scenarios remain on the table including a general election later this year however today’s ruling makes it far more difficult for the government to restrict parliamentary Brexit oversight making a no deal on 31 October less likely.”
Adrian Lowcock, head of personal investing at Willis Owen, said: “Investors should be wary. The decision doesn’t change as much as many may think.
"The uncertainty remains as high as ever and the Prime Minister has a number of options available, including proroguing parliament again or stepping down, both of which would add to the uncertainty.”
david.thorpe@ft.com
