* Pound helped by report on May's Brexit plan
* Dollar slips from 7-month highs hit on rate hike
By Anirban Nag
LONDON, Oct 12 The struggling pound rose on
Wednesday after 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 in order to impose maximum control on its
borders - pushed the currency to 31-year lows last week,
including on Friday when it lost 10 percent.
May's decision comes ahead of a court ruling on Thursday,
which will decide if she can trigger Article 50 - the rule that
initiates the process of separating Britain from the European
Union - without the consent of parliament.
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 percent at $1.2240, 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 percent at 90.25 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."
DOLLAR TAKES A BREATHER
The dollar index, which tracks the greenback against a
basket of six major currencies, slipped 0.1 percent to 97.638
after hitting 97.758 on Tuesday, a post-March peak.
The euro was trading down at $1.1038, having fallen
to $1.1032, its lowest since early August. Against the yen, it
was flat at 103.53
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 awaited 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.
"There is an increased probability of bigger interest rate
differentials between Japan and the U.S., so that is a factor
for yen softening, although this is not as big a factor as it
used to be," IHS Markit's principal economist in Tokyo, Harumi
(Additional reporting by Lisa Twaronite; Editing by Louise