Three Day Hearing Concludes

The UK Supreme Court concluded its three-day hearing yesterday over the legality of UK PM Boris Johnson proroguing parliament earlier this month. Following a Scottish court ruling that Johnson acted illegally, the case was submitted to the Supreme Court, the highest court in the UK. Following the days of hearings, the Supreme Court has announced that it hopes to have a ruling early next week though there is no indication yet which way the verdict will go.

The essential battle comes down to the government’s lawyers arguing that prorogation is political and not a matter for the courts, while the prosecution’s lawyers argue that Johnson acted illegally to prevent MPs from having the necessary time to counter his Brexit strategy.

Lord Keen for the government told the court: "How in the context of that political minefield is the court to opine on the issue of purpose or improper purpose [of prorogation], legitimate purpose or illegitimate purpose... how are these concepts to be defined or applied?

"The applicants are inviting the justices into forbidden territory and an ill-defined minefield, and the courts are not properly equipped to."

Lord Pannick for the prosecution countered mainly around the length of the prorogation saying that the length "was motivated, or at least strongly influenced" by the PM’s belief that MPs were "a threat to the implementation of his policies".

The crossbench called on the judges to "make a declaration that the prime minister's advice to the Queen was unlawful and to make a declaration as soon as possible" adding that with such a declaration, Johnson should have to recall parliament next week.

The government’s lawyers have put up an ardent defence against the claim that Johnson acted illegally when suspending parliament and have even outlined how the PM could prorogue parliament a second time even if the Supreme Court rules against him next week.

In a document prepared by the government’s lawyers Sir James Eadie and Lord Keen explained that should the court find Johnson acted unlawfully though its reasoning leaves open the prospect of suspending parliament in a lawful way, then “in that scenario, the court would and could not make any order purporting to require Parliament to be reconvened… Parliament would remain prorogued.”

Former UK PM Opposes Johnson

While the government has put up a strong defence against the ruling made by the Scottish Court, those against Jonson have been equally passionate. Former UK PM John Major came out in opposition of Johnson claiming that Jonson had been dishonest in his actions, even going as far as comparing him to an untrustworthy estate agent.

Traders now await the court’s decision next week. In the meantime, in the uncertainty seems to be supporting the perspective that a no-deal Brexit is less and less likely. Should the court rule against Johnson, this would see a further unwinding of GBP shorts, supporting GBPUSD price action. Alternatively, if the court’s rule in favour of the PM, this could see GBP shorts building once again.

Technical & Trade View

GBPUSD (Bullish, while 1.23 holds, targeting above 1.2650)

GBPUSD From a technical and trade perspective. Price is nearing my intraday target of 1.26 where I will be squaring intraday positions. At the weekly R1 and with the medium-term bearish trend line just ahead, price is vulnerable to a retracement lower. In a wider range view, I will be watching price action as we retest 1.23, which could offer potential long entries for a reversal higher, targeting a move above the bearish trend line.

Please note that this material is provided for informational purposes only and should not be considered as investment advice. The views discussed in the above article are those of our analysts and are not shared by Tickmill. Trading in the financial markets is very risky.