By Jemima Kelly
LONDON, Jan 23 (Reuters) - Investors have largely priced in the British government losing its Supreme Court appeal on whether it can trigger Brexit talks without parliamentary approval, but traders - both human and computer models - will scour the ruling for clues on whether regional assemblies will get a say.
British Prime Minister Theresa May will learn at 0930 GMT on Tuesday whether the court has upheld a High Court decision in November that her government must get approval from fellow lawmakers before triggering of Article 50 of the Lisbon Treaty, the formal means of exiting the bloc.
The government is widely expected to lose its appeal - online spreadbetter Betfair is showing a 90 percent probability that the Supreme Court will uphold the previous ruling.
But analysts said the ruling could contain many as-yet-unknowns, meaning sterling volatility - which has been elevated in recent months and drove the biggest one-day rise in the currency since the 1990s last week - is likely to spike around the time of the court ruling.
Key words that algorithm-driven trading models - which take up an increasingly large slice of currency markets - have been programmed to react to in a binary manner are likely to act as the initial sterling triggers, with human traders, who need more reaction time, following behind.
"It's not just a case of which way they rule - the exact wording of what sort of involvement parliament will have will be important," said MUFG currency strategist Lee Hardman.
"The knee-jerk reaction will probably be to see the pound strengthen, but the upside would probably be fairly modest on the back of that," he added.
Crucial among the unknown risks in Tuesday's ruling - and therefore likely trigger points, analysts said - would be whether the Supreme Court rules that lawmakers not just in Westminster but also in devolved parliaments across Britain would have to approve Article 50 being triggered.
While the thrust of the case centres on whether the British parliament has to give its assent, the judges also heard arguments from the Scottish government and lawyers for Northern Irish challengers that Britain's devolved assemblies must give their approval too.
Should the court agree - an outcome ministers believe is unlikely - an ongoing political breakdown in Northern Ireland could derail May's timetable, following the collapse of the province's power-sharing government.
"A key risk would be if the court were to give Scotland's and Northern Ireland's assemblies a say, as that could trigger a potential constitutional crisis," Citi currency analyst Nishtha Asthan wrote in a note to clients.