The UK parliament must vote on whether to start the process of leaving the EU, the High Court has ruled, despite protestations from Prime Minister Theresa May.
According to the BBC, the ruling will mean the government cannot trigger Article 50 of the Lisbon Treaty on its own.
The PM (pictured) had argued the referendum and existing ministerial powers mean MPs do not need to vote, and the government is expected to appeal the High Court's decision.
According to the Financial Times, a UK government spokesman said: "The country voted to leave the European Union in a referendum approved by Act of Parliament. And the government is determined to respect the result of the referendum. We will appeal this judgement."
May has said she will activate Article 50 - which will notify the EU of the UK's intention to leave the EU - by the end of March. Members of the EU have said negotiations around the UK's departure from the EU cannot begin until Article 50 is activated.
Commenting on the decision, Martin Arnold, director - FX & macro strategist at ETF Securities said: "Today's High Court judgement is likely to give fresh impetus to the pound, as the ruling takes the decision about triggering Article 50 out of the government's hand.
"Optimism from investors is stemming from the fact the UK Parliament will attempt to steer the UK further away from the 'hard Brexit' stance of the Conservative government, which will be less damaging for the UK economy.
"Volatility is likely to remain a feature for currency markets, with an appeal by the government likely. The pound jumped over 1% against the dollar but has since pared some gains."
Despite the Brexit vote, many firms reaffirmed their commitment to London and the UK last month, according to the Morgan McKinley Employment Monitor for August.
The monitor showed a 4% rise in both jobs available and job seekers registering their interest, despite Brexit and the summer break.
However, the survey found fears over the implications of the activation of Article 50 are worrying CEOs in the financial services sector.
As such, recruitment activity in this area increased by just 1% in September month-on-month, following two months of strong growth.