(Updates prices, adds quote)
* Pound helped by report on May's Brexit plan
* Dollar hits 7-month high on rate hike view
* Euro at 11-week low against dollar
By Anirban Nag
LONDON, Oct 12 The struggling pound rose on
Wednesday following a brutal sell-off, as 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
Those fears - that Britain will give up full access to the
EU's single market - pushed sterling to 31-year lows last week,
including on Friday when it lost 10 percent within minutes.
A court will rule on Thursday whether May can trigger
Article 50, initiating the process of separating Britain from
the European Union, without the consent of parliament. A
spokeswoman for May said there will be no vote in Britain's
parliament on triggering the formal Brexit talks.
Many lawmakers seem to favour a "soft Brexit" or no Brexit
at all and investors fear the "hard" option could hurt trade and
foreign investment needed to fund Britain's huge current account
deficit, one of the biggest in the developed world.
Sterling was up 1.2 percent at $1.2270, after
having tumbled to $1.2086 on Tuesday when it appeared it was
heading back towards a 31-year low of $1.1450 hit on Friday. The
euro too was down 1.5 percent at 80.97 pence
"After weeks of tough rhetoric pushing sterling into a
trading environment closer to an emerging market currency, the
government may aim to stabilise markets, with its rhetoric and
suggestions now possibly shifting in tone," Morgan Stanley's
head of currency strategy, Hans Redeker, said.
"However, there is a fine line to walk as May's Conservative
Party wants a clean split from Europe. In addition, giving in
too much, even before Article 50 negotiations have started,
shifts the negotiation advantage towards the EU. Hence, the
pound's rebound should be limited and followed by a decline."
Elsewhere, the dollar index, which tracks the greenback
against a basket of six major currencies, hit a 7-month high of
97.817, its highest since early March. The euro was
trading down at $1.1015, an 11-week low, while against
the yen, it was slightly higher at 103.55
The dollar had been on an uptrend on rising expectations
that the U.S. Federal Reserve would raise interest rates as
early as this year, with markets pricing in about a 70-percent
chance of a hike in December.
Investors await the minutes of the Federal Reserve Open
Market Committee's September meeting, scheduled to be released
later on Wednesday, as well as U.S. retail sales data on Friday.
"Since the market is still not fully priced for a December
rate hike, it seems reasonable to assume that the dollar may
still have some upside potential between now and year end,"
Rabobank said in a note.
"However, we expect that this will be limited by the
perception that the pace of Fed tightening is likely to remain
(Editing by Louise Ireland)