Sterling surges on suggestion of parliament ratifying Brexit

Sterling vaulted some 1% higher in trade on Tuesday as a government lawyer told the High Court in London that parliament will "very likely" have to ratify any British deal to quit the European Union (EU).

UK voted to leave the EU by a narrow margin in a non-binding referendum in June, sending sterling into a spiral lower on major crosses.

Mixed interpretations of the UK consumer-price index (CPI), an inflation gauge, were also a factor in the British pound's performance on Tuesday.

The comment by lawyer James Eadie, one of those representing the Theresa May-led Tory government, came amid a legal challenge on who has the right to trigger Article 50 of the Lisbon Treaty.

May alleges Royal Prerogative in moving to trigger the exit clause, the challengers assert that the decision should rest with parliament.

At about 14:10 BST, sterling was up 0.77% to $1.2277, and it was ahead 0.96% to €1.1182.

The British currency has been especially sensitive to Brexit-related news and macro data since the 23 June referendum.

Earlier on Tuesday, the UK CPI increased an annualised 1.0% in September, after a 0.6% gain in August, Office for National Statistics said. A rise of 0.9% was forecast.

The pick-up in inflation was driven by clothing and fuel prices.

On a month-on-month comparison, CPI rose 0.2% in September, in line with estimates and after a 0.3% rise in August.

Core inflation jumped a year-on-year 1.5% last month after a 1.3% increase in August, beating forecasts for a 1.4% rise.

Bank of England Governor Mark Carney last week warned that inflation will rise as weaker post-Brexit pound makes import costs more expensive.