Supreme Court Rules

Yesterday we had the long-awaited ruling from the Supreme Court over whether the Brexit plans must go to a vote in Parliament.

The court ruled 8 to 3 in favour that Theresa May’s government must take it to a vote to get approval before invoking Article 50, starting the divorce proceedings from the EU. It was expected this would be the case, having already been the decision in the High Court but they also decided it was not necessary to get approval from regional assemblies, i.e., Scotland and Northern Ireland, which could have made the process even more challenging than it is proving to be.

As the results were read out the pound strengthened as we would have expected with any possible delays to the Brexit proceedings, but then we saw sterling weaken again significantly losing over half a cent against the single currency in minutes. After a brief recovery, it continued downwards to an overall cent loss by lunchtime. The pound versus US dollar followed a similar path, with initial gains followed by steep loses moving down nearly a cent and a quarter.

The day’s data played little role in the movement of the market as EU manufacturing and services PMI both missed expectations, while UK public sector borrowing figures were lower than forecast.

As lunchtime came and went and the US markets opened, it seems the resistance levels had been tested to the full and sterling gradually clawed back its losses across the board. As earlier, the data did little to sway things as Markit services data came in higher but new homes sales lower than expectations. The US investor sentiment apparently felt the parliamentary vote more significant than its European counterparties as the pound clawed back all its previous losses and some.

So as the dust settles and the Brexiteers look to move forward its likely sentiment towards the pound will be shakey at best. As in recent weeks, when the Pound has made any gains, it’s often followed by a correction. So those with a currency purchase to make, who didn’t take advantage yesterday afternoon, should give the team a call sooner rather than later today as we have some data releases which could help sterlings demise.

German IFO business sentiment figures come out first thing alongside Italian and French eco stats. The afternoon brings US mortgage and housing data while the UK has nothing of key significance.