Sterling on the up

Sterling slipped back a little after its strongest one-day gains in over three months on a trade-weighted basis, having been boosted after a UK government lawyer said parliament would have to ratify any deal to take Britain out of the EU.

Having fallen to a record low last week on worries that Britain would undergo a “hard” exit from the European Union, in which access to the single market was sacrificed for the sake of tighter controls on immigration, the Bank of England’s trade-weighted sterling index jumped 1.4 percent yesterday.

Lawyer James Eadie, who is representing the government in a High Court challenge over who has the right to trigger the divorce process between Britain and the EU, said on Tuesday that parliament – not just the ruling Conservative government – would “very likely” have to ratify any Brexit agreement.

For that upward momentum to be sustained and for us to see a larger rebound we’d need to see the courts rule that parliamentary approval is required for triggering Article 50 – in our view that’s more important and the market would be more sensitive to that development.

London’s High Court said on Tuesday it would rule “as quickly as possible” on whether parliament in its entirety must trigger Article 50, which starts formal divorce proceedings.

Job creation in Britain slowed in the three months to August although there was little sign of a big hit to the labour market from the country’s decision to leave the European Union, official data showed this morning.

The number of people in work rose by 106,000 between June and August, down from gains of more than 170,000 in each of three previous readings.

The unemployment rate held at a nearly 11-year low of 4.9 percent, in line with a forecast in a poll of economists.

The number of people out of work rose by 10,000 in the three months to August, the first rise since the three months to February.

Unemployment is widely expected to rise more sharply as companies hold off from hiring as they wait for more clarity on the country’s future ties to the EU, which could take years to emerge.

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