The pound rose close to 1.245 against the greenback, after starting the session at 1.230, although it quickly fell back to trade at around 1.240 at 10:20 a.m. London time. At one stage the currency was up 1 percent for the session.
The court ruled that the entire U.K. parliament must vote on whether the country can start the process of leaving the European Union. This deals a blow to Prime Minister Theresa May, who had argued that the government on its own could trigger "Article 50" and start the divorce with the EU, despite criticism that this was unconstitutional.
There had been concerns that lawmakers at the heart of the U.K. government would opt and force through a so-called "hard Brexit" without the consent of parliament. Politicians in the U.K. mostly campaigned to stay in the EU despite the wider public voting for the opposite.
With the court ruling, it now makes it less likely that a "hard Brexit" scenario - which could have meant a loss of access to the EU's single market - could be carried through.
The court granted the government permission to appeal against the ruling and a government lawyer said the Supreme Court had set aside days at the beginning of December to hear the matter, Reuters reported.
U.K. Trade Minister Liam Fox - who campaigned for a Brexit - said he was disappointed by the ruling, according to Reuters. He added that the government will now carefully consider how to proceed after the court ruling. The BBC reported that an appeal from the government is likely.