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Pound Higher As U.K. Top Court Rules Against PM Johnson's Parliament Suspension

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The pound firmed against its key counterparts in the European session on Tuesday, as U.K. Supreme Court ruled that Prime Minister Boris Johnson's decision to suspend Parliament was unlawful, thwarting his plan to deliver Brexit on October 31.

The court found that Johnson lied to the Queen and the move to shut down Parliament was unlawful, void and of no effect.

The 11-judge court concluded that Johnson's decision to advise the Queen to prorogue was unlawful as it had the effect of frustrating or preventing the ability of Parliament to carry out its constitutional functions.

Lady Hale, president of the UK Supreme Court, said the effect of the prorogation was "extreme" as the Commons "has a right to a voice."

The ruling gives a historic blow to the PM, who had vowed to deliver Brexit by October 31 deadline.

Figures from the Office for National Statistics showed that the UK budget deficit narrowed in August.

Public sector net borrowing, excluding banks, was GBP 6.4 billion, compared to a GBP 6.9 billion deficit seen in the same period last year.

The pound was lower early in the European session, as investors cautiously awaited the landmark court ruling on Johnson's five-week suspension of U.K. parliament.

The currency was trading mixed in the previous session, by rising against the yen and the franc but holding steady against the euro and the greenback.

The pound appreciated 0.6 percent to 1.2490 against the greenback, from a low of 1.2414 it recorded at 4:00 am ET. The pair had closed Monday's deals at 1.2429. Next near term resistance for the pound is likely seen around the 1.28 level.

After falling to 133.55 versus the yen at 3:45 am ET, the pound rebounded 0.8 percent to hit a 2-day high of 134.61. The pair was valued at 133.67 when it ended trading on Monday. The pound is seen facing resistance around the 138.00 mark.

Survey results from IHS Markit showed that Japan's private sector expanded at a slightly slower pace in September as manufacturing activity contracted further.

The Jibun Bank flash composite output index fell to 51.2 from 51.9 in August. Nonetheless, a reading above 50 indicates expansion.

The pound was up by 0.6 percent at 1.2364 against the franc, after falling as low as 1.2293 at 4:30 am ET. The pound had finished Monday's trading session at 1.2306 against the Swiss franc. The currency may locate resistance around the 1.27 region, if it rises again.

The U.K. currency added 0.5 percent to hit a 2-day high of 0.8806 against the euro, rebounding from a low of 0.8853 seen at 4:00 am ET. The euro-pound pair was quoted at 0.8838 at Monday's close. Further rally is likely to take the pound to a resistance around the 0.86 mark.

Survey results from the Munich-based Ifo institute showed that German business confidence improved slightly in September as the better assessment of the current situation offset the worst decline in expectations over a decade.

The Ifo business climate index rose more-than-expected to 94.6 from 94.3 in August. The expected reading was 94.5.

Looking ahead, U.S. consumer sentiment index for September is due in the New York session.

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