Laith Khalaf, of Hargreaves Lansdown, said: “The High Court ruling will be seen as increasing the odds of a soft Brexit, and the reaction of domestic stock prices shows the market thinks that would be preferable for the UK economy.”

Jordan Rochester, a currency analyst at Nomura, said the pound was likely to strengthen "in the short term", even as the Government has said it will appeal the ruling. He said: "Sterling could get stronger even though some of the initial euphoria has faded because of the Government's decision to appeal the ruling there are a host of other factors that suggest more upside is possible".

However, Mr Rochester said markets could still receive a painful "wake up call" as a potential vote in Parliament did not signal a fundamental change in the Government's negotiating strategy. "While the market took the news positively as it implied a higher probability of a "soft Brexit", it's not yet over and in the long run the pound is likely to trade lower," he said.

"The markets may hope the ruling is an early signal that the UK is more likely to want to remain in the single market, however I don't think the Government will want to tie itself to a a commitment of this sort even before negotiations have begun.

"Commentators are discussing the possibility of a failed vote, delayed Article 50 trigger, early elections and indeed another referendum. But this is likely to be a false hope and one that could eventually prove painful once the market’s Hard Brexit realisation comes back into full play."