Supreme Court set to rule on Article 50

24 January, 2017

Tom Arnold

Finally, the day has dawned where we will find out the judgement of the Supreme Court on the government’s appeal against the High Court ruling that parliament needs to be consulted before Article 50 can be triggered to begin the process of exiting the EU. The ruling is a critical decision for the UK economy as a whole, and specifically the Pound.

If the government win the appeal this clears the way for Article 50 to be triggered in March and irrespective of whether you are a Brexiteer or a Remainer, this almost certainly means significant weakness for the Pound. The UK economy has done well since the June 2016 referendum, but at every step where Brexit has come to the fore, the Pound has suffered, and at every sign that Brexit could be delayed, the Pound has strengthened. This is the biggest hump in the road for Brexit so far, and therefore we expect there will be a significant move either way, depending on the result.

The eleven Supreme Court judges have all been brought together to make this decision – the first time they have all been involved simultaneously since the Court’s inception in the 1870s, and it has been reported that expectations are for the government to lose by a vote of 7-4. This should mean a boost for the Pound, but if you have Sterling in hand and are looking to buy Euros, Dollars or one of the other many currencies Currency Index can secure, then beware. Because of this report/leak of the likely result, the Pound has already put on some gains in the last few days, and this “pricing-in” could be overcooked or could be spot on. So even if you get the result you are hoping for, the massive jump in the market you are expecting could fail to materialise.

There is, of course, a risk this report is wrong, and the government could win – the pricing-in goes both ways and would likely lead to a large fall in Sterling’s position, as the pricing-in unwinds and the actual loss is added to the mix.

Can you afford a huge loss to your budget for your overseas transfer? If not then it might be advisable to avoid the decision entirely and secure your currency before 9.30 this morning – we have seen the pricing-in gains added to the Pound’s positivity after Theresa May confirmed parliament would rule on the final negotiated deal, already, so this could be the perfect time to buy.

Aside from the Supreme Court ruling, there are some other more run of the mill data releases today in the form of European manufacturing and services PMI, UK public sector net borrowing, US manufacturing PMI and US home sales data. All of this is likely to be overshadowed by the Supreme Court but could cause some movement in the markets if something unexpected occurs.

Make sure to stay in close contact with your CI account manager if you do have an upcoming currency requirement, and why not have a conversation with us first thing this morning if you are concerned about the Supreme Court ruling and what impact it could have on your overseas transfers. CI has options available for you to secure your funds ahead of potential market volatility with the Article 50 ‘Brexit’ Appeal, even if you do not need the funds for some time.

You can watch the judgment hand-down on Supreme Court Live from 9:30.