Before we get on with today´s forex events and forget about yesterday, let´s just have a short analysis about what's going to happen with Brexit now that the High Court ruled against the UK government. How is it going to impact the Brexit process, the UK economy, and the GBP?
Some people thought that this ruling means Brexit is over. The case brought to the court by anti-Brexit campaigners was never about accepting or declining the referendum; the UK High Court decision means that this process will go through parliament first, before Article 50 is triggered.
Personally, I don´t think that the UK parliament members will vote against the will of the people. Many Brits might regret that they voted pro Brexit, but the referendum is done and no one can represent the public better than the public itself and of course not the parliament, although they have been voted as well.
In fact, I heard some rumours yesterday that the voters in the UK parliament have been expecting this sort of decision from the High Court in some sort of way, so it has been agreed on the backstage that the parliament will vote to trigger Article 50. No one is brave enough to go against the will of the people, even though that will might have already changed.
What does this mean for the UK economy?
If the process through the parliament is smooth and fast, then this last decision will not have much affect on the UK economy. But, we know the nature of politics; even if there´s a deal to pass it through, which I´m not 100% sure about, the politicians can ruin it at any moment and make a giant mess about everything and at any time. So if the debate gets too serious, then it might last for ages before the parliament decides either way.
This could be very dangerous for the UK economy. The uncertainty will increase again and the firms and companies don´t like uncertainty. We saw a few weeks ago that some major banks froze hiring in the UK because of Brexit uncertainty. Now, if the parliament makes a mess of this and that goes on for too long, then that would be a disaster for the economy. A quick Brexit is a much better option than staying too long in limbo.
By the way, this is not the final decision though. The Supreme Court has the final say, which will take the appeal from the losing side, the government, in December. This also has implication for the GBP, but we´ll get into that in another update today.
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