Sterling rallies, stocks slip on UK Supreme Court ruling

Sterling extended gains on Tuesday while euro zone stocks tumbled after Britain's Supreme Court ruled that prime minister Boris Johnson had acted unlawfully when he advised Queen Elizabeth to suspend Parliament this month.

The British currency gained as much as 0.4 per cent against the euro to 88.07 pence and up nearly 0.5 per cent versus the dollar to $1.2491. Stocks tumbled however on the back of the stronger pound.

British gilt yields rose following the decision, dragging safe-haven German bond yields higher.

British government bond futures fell to a session low of 133.12, down 60 ticks on the day, while 10-year gilt yields rose 3 basis points on the day to 0.585 per cent.

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“While the decision of the UK’s highest court is a big political win for oppositions parties, markets are taking the view it is unlikely to lead to any major Brexit developments before the next big milestone in six days’ time when the EU wants to receive the UK’s written proposal for a backstop replacement and beyond that, the EU summit on October 17th and 18th and the law requiring an extension be requested on October 19th,” said Gearoid Keegan, Investec Treasury

London’s blue-chip FTSE 100 hit its day low as sterling rallied after the ruling. A JPMorgan’s index tracking UK stocks that make their revenue at home hit their day highs on the news. – Reuters