December has arrived so quickly. It was about a month ago when the UK High Court ruled that the UK government couldn´t trigger Article 50 on its own. However, with the US election sending the forex market many cents higher/lower, the weeks has gone by very quickly.
The Italian constitutional referendum is already over and now it´s the turn for the UK Supreme Court to bully the GBP pairs and the financial markets around. Today is the first day of the hearing and the Supreme Court has made it clear that this is purely a matter of legislation, not a political decision.
This is sort of confusing for GBP traders because the market might take the Pound in either direction, depending on the immediate sentiment. I mean, if the Supreme Court rules against the High Court and grants permission to the UK PM to trigger Article 50, then it will likely be negative for the GBP as Britain will be headed for a hard Brexit. Do you remember the “have a cake and eat it too” notes coming out of the UK Brexit office?
If the Supreme Court rules against the UK government, then we might see an initial GBP rally, as the hard Brexit scenario becomes less likely. Still, that doesn´t mean that Brexit will be dead; it means that Brexit will go through the parliament first.
As I said, the knee-jerk reaction will be positive for GBP and GBP pairs, but the process might go on for too long and the uncertainty will increase. This means trouble for the Pound in the mid-term. GBP/USD is waiting on a limb here, but we´ll stay clear of GBP pairs for the time being because the whole picture is too blurry.