The British pound fell by 0.5% today as investors prepared for further uncertainty after the UK’s Supreme Court ruled PM Johnson’s decision to suspend parliament as unlawful.
The ruling has opened the doors to several options including a further delay in Brexit, a new election, as well as a second referendum. However, it seems to have calmed nerves since the likelihood of Britain leaving the EU without a deal in place by the October 31st deadline, has reduced.
According to Mark Haefele, Chief Investment Officer at UBS Global Wealth Management:
Predicting the ultimate outcome of Brexit remains difficult. As a result, the longer-term risk-return outlook for UK equities looks uncertain and we still advise being nimble on sterling.
Against the dollar, the pound has been losing its initial gains since the Supreme Court’s decision, falling half a percent to $1.2434.
The pound gained as much as 0.6% to $1.2504, near a 2-1/2 month high of $1.2582. However, overnight the cable slipped once again as investors began to worry about the short-term situation.
Against the euro, the currency also weakened by 0.2% to 88.41 pence.
The political blow still leaves a lot of uncertainty for the economy as the House of Commons reconvenes today and has yet to plot the next moves.
Kit Juckes, an FX strategist at Societe Generale in London, said, “the main risk now is that we are in a never-ending limbo.”
All eyes are on Johnson as he returns to the city today and has defied calls to step down from PM.