Supreme Court ruling triggers sharp rise in pound
The UK's Supreme Court ruling forcing Prime Minister Boris Johnson to reopen Parliament triggered a sharp rise in the pound yesterday.
Sterling shot up on expectations the ruling would thwart the prospect of a hard, no-deal Brexit on October 31.
But without any further clarity on a political route out of the current impasse, sterling remains volatile.
Bank of Ireland currency analyst Lee Evans said the market read the ruling as reducing the chances of a no-deal exit by handing control of the Brexit process back to the British parliament.
But he said it might also increase the chances of a UK general election with an uncertain outcome.
"The pound's recent gains have been predicated on the increasing chances of a deal.
"However, the (Supreme Court) ruling could potentially reduce PM Johnson's flexibility in negotiations meaning some of sterling's strength may well fade in the coming days," he added.
After the court ruling, the pound gained as much as 0.6pc to $1.2504 against the dollar and was up 0.4pc to 88.075 pence versus the euro.
Sterling has yo-yoed over the past two years in response to the political volatility around the Brexit process, something analysts note is more associated with emerging market - or third world - currencies.
Stephen Gallo, European head of FX strategy at BMO Capital Markets, said sterling looked "untradeable" for the time being.
"Our base case is still that new elections will take place sooner rather than later, but we are clueless as to what path UK politics will take in order to bring us there. The same holds for Brexit," he said.