(Refiles with UPDATE 1 tag)
By Jemima Kelly
LONDON Oct 12 Sterling rebounded on Wednesday
after Britain's prime minister said she would offer to give
lawmakers some scrutiny of the Brexit process and that Britain
would seek "maximum possible access" to Europe's single market.
Sterling plunged in the wake of Britain's shock vote to
leave the European Union -- it has lost almost 18 percent
against the dollar since the referendum on June 23. On
Tuesday, it hit its lowest ever level on a broad, trade-weighted
index basis, according to the Bank of England's website.
Having fallen for four straight days on growing anxiety that
Britain's exit from the European Union would see it give up
access to the EU's single market in order to impose maximum
control on its borders, a scenario known as "hard Brexit", the
pound recovered more than 1 percent on Wednesday.
It had earlier rallied as much as 1.6 percent, to a high of
$1.2326, on a news report that lawmakers would be given the
chance to vote on Prime Minister Theresa May's Brexit strategy.
It trimmed some of those gains after a spokeswoman said
there would be no vote on triggering "Article 50", which will
start the formal process to take Britain out of the EU and which
May has said she will invoke by the end of March.
"The move this morning was on May's comments but largely
because they were initially read as something they weren't: she
is not really changing stance, parliament will not be able to
veto a hard Brexit," said the head of hedge fund sales at a big
currency trading bank in London.
By 1205 GMT sterling was trading up 1.1 percent on the day
at $1.2253. It had climbed as high as $1.2275 during the weekly
Prime Minister's Questions in parliament, after May said Britain
would be ambitious in its Brexit negotiations and would strive
for "the maximum possible access to the European market", but
quickly reversed that move.
"Now that we've got ourselves pricing in a pretty
hard-looking Brexit into market sentiment ... we're going to be
sensitive to anything that challenges that view that we're
putting control of immigration above protecting access to the
Single Market, bank passporting etc," Societe Generale
macroeconomic strategist Kit Juckes said.
Against the euro, sterling also jumped 1.2 percent on the
day to 89.97 pence.
Norway's sovereign wealth fund, the world's largest and a
major owner of British shares and government bonds, told Reuters
on Tuesday that Friday's "flash crash" was a correct move that
reflected the expectations for Britain's economy.
The crash wiped 10 percent off the value of the pound,
taking it as low as $1.1491, in just 10 minutes, although it
bounced back to finish the week just above $1.24.
The major banks have stuck to forecasts of about $1.20-1.25
for sterling, but that apparently computer-trader-driven slide
has left some wondering if a drop to near parity is likely.
"What is clear is there is a lack of interest to buy
sterling from clients. It is hard to see who is going to come in
and support it from here," said the hedge fund sales head.
(Additional reporting by Patrick Graham; Editing by Catherine