(Updates after labour market data)
* Graphic: sterling and gilt yields bit.ly/2dgAXn1
* Graphic: sterling year-to-date tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, Oct 19 Sterling hit an eight-day high on
Wednesday, building on its strongest one-day gains in over three
months on a trade-weighted basis, after a UK government lawyer
said parliament would have to ratify any deal to take Britain
out of the EU.
The currency didn't show much reaction to data released on
Wednesday showing job creation in Britain slowed in the three
months to August. The numbers showed little sign of a big hit to
the labour market from June's vote for Brexit.
Having plunged to a record low last week on worries that
Britain would undergo a "hard" Brexit, in which access to the
single market was sacrificed for the sake of tighter controls on
immigration, the Bank of England's trade-weighted sterling index
jumped 1.4 percent on Tuesday to an 11-day high of 74.7.
It was just below that on Wednesday at 74.6.
Lawyer James Eadie, who is representing the government in a
High Court challenge over who has the right to trigger the
divorce process between Britain and the EU, said on Tuesday that
parliament - not just the ruling Conservative government - would
"very likely" have to ratify any Brexit agreement.
"That helped to improve sentiment towards the pound so we
had a modest relief rally yesterday," said Bank of
Tokyo-Mitsubishi UFJ currency economist Lee Hardman.
"But for that upward momentum to be sustained and for us to
see a larger rebound we'd need to see the courts rule that
parliamentary approval is required for triggering Article 50 -
in our view that's more important and the market would be more
sensitive to that development."
Against the dollar, the pound gained 0.3 percent to hit an
8-day high of $1.2334. It was also 0.1 percent up at
89.24 pence per euro.
"Expectations for further falls ... are still strong, and
the recent rebound is likely being seen by investors as an
opportunity to reload selling positions," said FXTM analyst
London's High Court said on Tuesday it would rule "as
quickly as possible" on whether parliament in its entirety must
trigger Article 50, which starts formal divorce proceedings.
But whichever side loses will almost certainly appeal to the
Supreme Court, the UK's highest judicial body, which will not
give a final verdict until December.
British government bond prices were little changed after the
labour market data, with 10-year yields just 1 basis
point up on the day at 1.09 percent and well off the three-month
high of 1.223 percent struck on Monday.
(Additional reporting by David Milliken; Editing by Richard