The European Court of Justice said Monday that the U.K. can cancel Brexit without asking for permission from other European Union (EU) member states.
Sterling jumped to day's high, up about 0.12 percent to $1.2758 on the back of the news.
The decision followed the guidance given last week by a non-binding opinion to the court from a top European law officer.
The case was brought by a group of Scottish lawmakers who sought a legal ruling on if the U.K.'s request under Article 50 to leave the EU could be unilaterally revoked before the Brexit deadline of March 29, 2019.
Article 50 allows a country to trigger the process that takes them out of Europe's political and economic union. U.K. Prime Minister Theresa May invoked the exit clause in March 2017.
The European court took evidence from the group of lawmakers who said they wanted clarity to help decisions made by the U.K. Parliament. The British government told judges that they opposed the unilateral right, arguing that the case is a politically-motivated bid to frustrate Brexit.
The court also heard from lawyers representing the European Commission and Council of the European Union — which is the executive arm of the EU and the institution that represents member states' governments. They argued that revoking Article 50 should involve unanimous agreement from the other 27 nations.
The EU is worried that allowing a country to trigger Article 50 and then reverse the decision with no additional input could become a tool for those unsatisfied with the policies of Brussels. For the U.K. government and pro-Brexit politicians, there are concerns it could pave the way for a second referendum, giving the public an option of remaining in the EU.
Not according to the U.K. government. May's team have stuck fast to the message that her deal is the only reasonable outcome of Brexit and that Britain will definitely leave the European Union on March 29 next year
In a statement, the Department for Exiting the EU further played down the case's importance: "The government has made submissions to the CJEU. In any event, the government will not be revoking Article 50."
On Tuesday, Theresa May will put her Brexit proposal to the test in the U.K. Parliament. Should her motion fail to satisfy lawmakers, the possibility of pressing pause or cancelling Brexit may increase.
The House of Commons would still need to vote to stop Article 50 but those against Brexit can highlight that, beyond Westminster, there is now no legal impediment to stopping the divorce.