Pound Reaches 2-Month High as Traders Pin Hopes on Supreme Courtby
Currency touches highest level against dollar since Oct. 4
Market expects government to lose Brexit case: Rabobank
The pound reached a two-month high as the U.K.’s top court heard a second day of arguments in a court case over who has the right to trigger Britain’s exit from the European Union.
Sterling rose for a sixth day versus the dollar, having posted its first monthly gain since April in November. The U.K. government has already lost a case in the High Court over whether parliament should be allowed a vote before starting Brexit. If the Supreme Court also rules against the government, lawmakers will get a say in the process. This has tempered market concerns of a so-called hard Brexit, where Britain would lose access to the single market, and helped support the pound.
“Given that the High Court decision on Nov. 3 appeared to be fairly strongly in favor of Parliament, the market has gone into this Supreme Court appeal thinking that the government’s chances of winning are reasonably low,” said Jane Foley, a senior currency strategist at Rabobank International in London. “Right now, the market is more of a view that hard Brexit can be avoided” which “coupled with some position adjustment, is why we are where we are.”
- The pound rose 0.2 percent to $1.2758 as of 11:11 a.m. in London, having earlier reached $1.2775, the highest since Oct. 4
- Sterling gained 0.2 percent to 84.40 pence per euro, after touching 83.05 pence Monday, its strongest level since July 22
- Benchmark 10-year gilt yields were little changed at 1.39 percent after the U.K. auctioned 2.5 billion pounds of the securities