The pound looked set for its best week since May after House of Commons speaker John Bercow said he would get creative to prevent Boris Johnson from disobeying the no-deal Brexit law passed by rebel MPs.
The currency hit a six-week high on Friday, climbing more than 1% to well above $1.24 (GBPUSD=X).
The news also follows a report that the Democratic Unionist Party (DUP) could soften its staunch opposition to the Northern Ireland backstop.
Though Arlene Foster, the leader of the Northern Ireland party that props of Johnson’s government in parliament, has called the reports “nonsense”, such a softening would make it far more likely that the UK would leave the EU without a deal.
Bercow said in a speech in London late on Thursday that the House of Commons would “creatively” attempt to block any attempt by Johnson’s government to break the law designed to prevent a no-deal Brexit.
Parliament “would want to cut off such a possibility and do so forcefully,” he insisted.
“Sterling has rallied to its highest levels against the euro and dollar since late July this morning, having gained more than 1% in reaction to the news that the DUP may be softening their stance on the Irish backstop,” said Michael Brown, a senior analyst at Caxton FX, in a note.
“However, the pound remains vulnerable, with politics set to continue dominating and the Brexit landscape shifting as quickly as ever.”
Bercow was also severely critical of the notion that Johnson could ignore the law. “Not obeying the law must surely be a non starter,” he said.
“Surely in 2019 in modern Britain, in a parliamentary democracy we parliamentarians, legislators, can not in all conscience be conducting a debate as to whether adherence to the law is or isn’t required.”