The European court of justice has decided that the U.K. can unilaterally revoke article 50, the country’s notice of its intention to leave the EU.
The decision came a day before the British House of Commons is scheduled to vote on Theresa May’s Brexit deal, which has had trouble finding favor among Members of Parliament. While opponents of Brexit welcomed the European court’s decision, it could throw the Brexit process into further turmoil and have a damaging ripple effect on the British and world economies.
Despite this, the pound rose slightly against both the euro and the dollar on Monday morning. Money Europe FX analyst Simon Harvey said the movements likely indicated the market is looking for “further guidance.”Amid dire predictions for the U.K. economy after Brexit, however, Harvey added that a strong vote against May’s deal and the re-introduction of a question about the second referendum could send the market into turmoil and the pound plummeting.
The European court’s decision also comes as the Office of National Statistics released growth numbers for the three months ending in October. The report painted a grim picture, with growth slowing to 0.4% from 0.6% in the third quarter over Brexit uncertainty, and there are indications that uncertainty will plague the fourth quarter as well.
Meanwhile, uncertainty over Brexit has even led some in the pro-Leave camp to bet against the U.K. economy. Two hedge funds that are part-owned by Leavers have taken short positions on British consumer brands and bulked up staffing outside of the U.K. to avoid disruptions to business after Brexit.