By Yumna Mohamed
LONDON (Reuters) - The pound rose almost a cent on Friday to register its best week against the dollar since October 2009, as worries eased that Britain would undergo a "hard" exit from the European Union and lose its access to the single market.
The battered pound has clawed back almost 3 percent <GBP=D4> this week, rising on a ruling from England's High Court on Thursday that the government needed parliamentary approval to start the Brexit process.
Investors are hoping that lawmakers - a majority of whom supported staying in the EU in June's referendum - will be emboldened by the ruling and will push for a "soft" Brexit in which Britain keeps close trade ties with the bloc.
With the dollar struggling amid concerns over a possible victory for Donald Trump in next week's U.S. presidential election, sterling hit a four-week high of $1.2558, up 0.8 percent on the day.
"We're seeing a bit of a relief rally now that the worst case scenario of a unilateral 'hard Brexit' has been deferred, and markets can start focusing on other factors (like) the U.S. presidential election," said CMC analyst Michael Hewson.
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Sterling was also helped on Thursday by the Bank of England's latest quarterly inflation report, in which it raised inflation forecasts.
"(That) means that further rate cuts are not going to be seen any time soon," Forex.com technical analyst Fawad Razaqzada said.
Thursday's High Court ruling was seen undermining Prime Minister Theresa May's authority, leading economists at Deutsche Bank to predict she would likely have to call parliamentary elections next year.
Despite this week's rebound, sterling is still down 16 percent against the dollar since June's referendum and has so far failed to reach the $1.26 mark that technical analysts said would suggest a sustained recovery.
Against the euro, the pound rose half a percent to 88.67 pence <EURGBP=D4>. It was up 1.5 percent on the week, cutting its post-referendum losses to 14 percent.
(Editing by Jemima Kelly and John Stonestreet)