3 Min Read
(Updates to open of U.S. trading; changes byline, dateline, pvs LONDON)
* Pound helped by report on May's Brexit plan
* Dollar index hits 7-month high on rate hike view
* Euro hits 11-week low against dollar
* Fed minutes scheduled for release at 2 p.m. ET (1800 GMT)
By Sam Forgione
NEW YORK, Oct 12 (Reuters) - Sterling rose on Wednesday amid indications Britain may avoid an aggressive and potentially damaging exit from the European Union, while the dollar hit a seven-month high against a basket of major rivals ahead of the release of Federal Reserve meeting minutes.
Fears that Britain would give up full access to the EU's single market pushed sterling to 31-year lows last week and led the currency to plunge 10 percent within minutes on Friday.
British Prime Minister Theresa May's offer to give lawmakers some scrutiny of the process to leave the European Union calmed market fears of a "hard Brexit." Analysts said May's discussions with lawmakers in parliament, many of whom are against Brexit, could lead to a compromise that would make the country's divorce from the EU less damaging to the UK economy.
May's offer to consult with lawmakers "doesn't take a hard Brexit off the table, but it does mean other voices will be heard, and therefore perhaps a more gentle approach," said Richard Franulovich, senior currency strategist at Westpac Banking Corporation in New York.
Sterling was last up 0.63 percent against the dollar at $1.2199, down from a session high of $1.2326.
The currency pared gains after Brexit minister David Davis told parliament on Wednesday that Britain's government has the right to trigger Article 50, the formal legal process for leaving the European Union, before beginning exit negotiations with the bloc.
The dollar index, which measures the greenback against a basket of six major currencies, hit a seven-month high of 97.968 ahead of minutes of the Federal Reserve Open Market Committee's September meeting, scheduled for release at 2:00 p.m. ET (1800 GMT).
Analysts said rising expectations that the U.S. central bank will raise rates in December were boosting the dollar, with one analyst saying traders would be watching closely for reinforcement of that view in the minutes' language.
"We suspect that the market will be more alert to the hawkish voices in the minutes," said Vassili Serebriakov, FX strategist at Credit Agricole in New York.
The euro hit an 11-week low of $1.1009 in morning U.S. trading, and was last down 0.27 percent at $1.1023. The dollar also hit an 11-week high against the Swiss franc of 0.9903 franc and was last up 0.43 percent against the yen at 103.95 yen. (Reporting by Sam Forgione; Additional reporting by Anirban Nag in London; Editing by Bernadette Baum)