The government said it would appeal against the ruling by England's High Court, and Britain's Supreme Court is expected to consider the appeal early next month.
A spokeswoman for May said the prime minister still planned to launch talks on the terms of Brexit by the end of March and added: "We have no intention of letting this derail our timetable."
Many investors took the view that lawmakers would now be able to temper the government's policies, making it less likely that the government would opt for a "hard Brexit" - a scenario in which it prioritises tight controls on immigration over remaining in the European single market.
The ruling has weakened May's Brexit position further and makes a new general election next year a very likely scenario.
Having already surged on the High Court ruling as well as data showing a growth spurt in Britain's dominant services sector, sterling was further boosted by the BoE's latest report, in which it said chances of a rate hike had risen since its last quarterly report. The BoE's policymakers voted 9-0 at their November meeting to keep rates on hold.
The , which has come under heavy political criticism for its near-zero rates, sharply adjusted its view of when Britain's economy will feel the pain of June's referendum decision to leave the European Union. In a set of quarterly forecasts published on Thursday, it predicted less of a short-term impact but warned that Britain's access to EU markets could be "materially reduced" which would hurt growth over "a protracted period."
The BoE said consumer spending and the housing market had proven more robust than it expected in August, and this - together with a boost to exports from a weaker currency - drove it to make a record upward revision to its growth forecast for 2017 to 1.4% from 0.8%. But in the longer term the was less positive. It revised down its 2018 growth forecast to 1.5% and saw growth of 1.6% in 2019 - implying a slower recovery and lower overall output than it expected in August.
The BoE responded to the Brexit vote by cutting interest rates to record low of 0.25% in August and restarted its massive bond-buying programme for the first time since 2012. It also said then that another rate cut was likely this year. But on Thursday it shifted to a neutral position as it predicted a record overshoot of above its target following sterling's fall to a 31-year low against the dollar.
BoE's Committee said in a statement: “There are limits to the extent to which above-target can be tolerated.” BoE forecast will jump to 2.7% this time next year, nearly triple its current level. was seen peaking at more than 2.8% in the first half of 2018 before falling slowly.
The GBP/USD long is getting closer to our target at 1.2580. What is important, the rate broke above falling June-October . We think the GBP/USD is likely to recover to 1.2815 (38.2% fibo of June-October fall), but the may be high. We have placed a bid at 1.2420 in the long-term part of our portfolio, but because of expected the position is marked as risky.
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