Of course, they could dismiss the extradition request as being unfounded. That's definitely how courts work in the UK and they have all the power to do so. Even the government could block extradition, if they wanted to.
"If they wanted to" being the key here; handing over Assange would give them a lot of goodwill and political credit, and with Brexit about to end badly when it comes to UK / Europe relationships, they're looking towards the US for trade deals.
They're already pretty far along in selling / privatizing the NHS [1] and getting rid of European food standards so they can import the US' bleached chicken and eggs [2], etc.
note: did not check if The Guardian is an unbiased source in this case. It's not owned by News Corp / Murdoch at least.
