Sterling traded close to a four-week high on Friday and was heading for its best week since March. The pound jumped right after England’s High Court put a spanner in the government’s plans to forge ahead with Britain’s exit from the European Union.
The battered pound returned to its 2.5% against the dollar this week with Thursday’s court ruling adding to a run of political and economic developments perceived as positive by investors worrying over the economic fallout of Brexit.
The pound surged to a four-week high close to $1.25 on Thursday. On Friday it remained close to that high at $1.2480.
Investors are hoping that Britain might now be able to avoid an economically disruptive “hard Brexit”, reckoning lawmakers – a majority of whom supported staying in the EU in June’s referendum – will now be emboldened and will push for Britain to keep access to Europe’s single market.
The pound started climbing earlier in the week when Mark Carney said he would stay as head of the Bank of England for an extra year to help with a smoother Brexit negotiation process.
But despite this week’s rebound, sterling is still 16% lower against the dollar than where it was before June’s EU referendum. It is 14% weaker against the euro and was trading at 88.90 pence on Friday.