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By Anirban Nag
LONDON Oct 13 Sterling was near a record low in
trade-weighted terms on Thursday as the start of a High Court
hearing on a bid to give lawmakers more of a say over Britain's
exit from the EU added another layer of uncertainty to the
The legal challenge, led by a pro-EU investment fund
manager, aims to force the government to seek parliamentary
approval to trigger Article 50, which sets the Brexit clock
Traders said both the timing and content of the hearing's
outcome were unclear, prompting investors to stay clear of the
"If the court decides that parliament should be allowed to
vote, sterling could rally on speculation that lawmakers may
vote against triggering Article 50," said Charalambos Pissouros,
senior analyst at IronFX Global.
"On the other hand, should the Court rule that the
government can proceed alone, this could be the trigger for the
next leg lower in sterling."
The pound has sold off sharply in the last two weeks on
concerns the government will negotiate for a "hard Brexit",
favouring tighter immigration controls over free trade and
thereby hurting the foreign investment needed to fund Britain's
huge current account deficit.
It surged as much as 1.5 percent against the dollar and the
euro on Wednesday after British Prime Minister Theresa May said
she would seek "maximum possible access" to Europe's single
She also said she would allow parliament some scrutiny over
the process, having previously angered lawmakers - and unnerved
markets - for refusing to divulge her strategy and saying she
would trigger Article 50 without giving them a say.
But the pound gave up some of its gains later on Wednesday
after May and her Brexit minister, David Davis, appeared less
concessionary in parliament. May also said parliament will not
vote on triggering Article 50.
On Thursday, sterling was down 0.1 percent at $1.2195
, having tumbled to $1.2086 on Tuesday when it appeared
to be heading back towards a 31-year low of $1.1450 hit on
Friday. The euro was up 0.2 percent at 90.35 pence
On a trade-weighted basis, sterling was at 73.8, not far
from a record low of 73.383 struck on Tuesday.
Comments from Scottish Nationalist Party leader Nicola
Sturgeon that Scotland will publish a fresh independence
referendum Bill for consultation next week also soured
Sterling has shed 18 percent against the dollar since
Britain's shock vote in June to leave the European Union.
Year-to-date it is the second worst performing currency of
30-plus tracked by Thomson Reuters Datastream, according to
In a signal that the slide may be starting to push up
inflation and hurt consumer spending, Britain's biggest retailer
Tesco pulled dozens of Unilever brands from
its website in a row over pricing.
"The current situation is anything but stable and another
slide (in the pound) would feed concerns far more than it would
help the UK's competitive position," said Kit Juckes, macro
strategist at Societe Generale. "
And so, it's worth remaining short sterling against both the
dollar and the euro."
(Reporting by Anirban Nag; editing by John Stonestreet)