Pound slips back as markets react to Brexit ruling

The pound has slipped back after the UK's highest court ruled on a legal challenge over the Brexit vote.

Sterling was initially a little higher at more than $1.25 as the Supreme Court upheld a ruling that the Government needs the approval of Parliament to trigger Article 50 - the formal process of leaving the European Union.

But it then dropped half a cent lower as the judges said there would be no need to consult with devolved administrations in Scotland, Wales and Northern Ireland - a decision that should speed up the exit process.

It remained two tenths of a cent lower in late Tuesday trading having fallen by as much as a cent at one stage following a reaction to the ruling by Scotland's First Minister, Nicola Sturgeon.

Ms Sturgeon said it was becoming "ever clearer" that Scotland must make a choice on taking its future into its own hands.

She has previously asserted that Theresa May's stance on Brexit has made it "more likely" that a second referendum on Scottish independence will take place.

Meanwhile there was anxiety among businesses about whether the ruling would mean more uncertainty about the timing or the nature of the UK's departure from the EU.

Sterling had climbed to a five-week high on Monday as Donald Trump's protectionist rhetoric and the confrontational start to his presidency weighed on the US currency.

The pound is about 17% down since Britain voted last June to leave the EU, which sent the currency to its lowest level against the US dollar since 1985.

It has remained well below its June levels since then while experiencing sharp swings on the latest twists in the Brexit process and speculation about whether a "hard" or "soft" Brexit deal would be achieved.

Last week the pound achieved its sharpest one day rise against the dollar since 2008 after Mrs May laid out a plan for leaving the EU which left open the possibility of the UK remaining part of a tariff-free customs union.

Kathleen Brooks, research director at City Index Direct, said following the latest ruling: "The market is spooked by the fact that Theresa May is now likely to trigger Article 50 by the end of March, as the Parliamentary vote is likely to pass."

The FTSE 100 Index, which benefits from a weaker pound, had a flat day despite sterling's weakness, with gains for miners eroded by a 21% plunge in BT's value.

In Germany, the DIHK Chambers of Commerce said the ruling raised "new question marks over the path to Brexit".

"That is unsettling German firms as without clarity and predictability regarding Brexit, industry will hold back even more with investment," said Volker Treier, the DIHK's head of foreign business.

Adam Marshall, director general of the British Chambers of Commerce, said: "What businesses will want to know is whether this ruling will affect either the terms of the Government's approach, or the timeline that firms across the UK have been told to expect.

"Businesses will also want to see action to ensure that this further political wrinkle does not add further to the volatility of exchange rates."

Businesses are facing inflationary pressure as the weakness of the pound pushes up import costs.

Easyjet said on Monday that this would knock £105m off its profits.