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The pound fell on Tuesday after the UK Supreme Court ruled that the Government must hold a parliamentary vote to trigger the start of official negotiations to exit the European Union.

The decision rejects the government's argument that Prime Minister Theresa May can use her executive powers, known as “royal prerogative”, to invoke Article 50 of the EU's Lisbon Treaty and kick-start two-year divorce proceedings.

“So any change in the law to give effect to the referendum must be made in the only way permitted by the UK constitution, namely by an Act of Parliament,” said David Neuberger, President of the Supreme Court

The pound was recently trading at $1.246, down around 0.6 per cent on the day. Before the judgement sterling was above $1.25, at a five-week high. Against the euro, sterling was 0.3 per cent lower at €1.160.

“Though there will be some cheer among those with lingering hopes for a delayed Brexit, today’s decision represents a marginal delay, at most,” said Geoffrey Yu, head of the UK Investment office at UBS Wealth Management.

“A prolonged sense of uncertainty does not mean Brexit will not happen, and we expect that Article 50 will be triggered in March regardless,” he added.

Sterling has endured a bumpy ride in recent months but has largely edged higher over the last week spurred by Ms May in a speech last Tuesday offering markets some clarity on her vision for Brexit.

That strength coincided with a fall in the dollar, triggered by concerns over US President Donald Trump's policies and his protectionist agenda just days after his inauguration.