* Pound back under pressure after Friday slide
* Prospect of softer Brexit counters economic, political worries
* Dollar dips ahead of Fed meeting, rate rise fully priced
* BOJ follows on Thursday
* Graphic: World FX rates in 2017 By Patrick Graham
LONDON, June 12 (Reuters) - The dollar dipped on Monday on the run-in to Wednesday's decision on U.S. interest rates, while Britain's pound was back under pressure after a 2-cent fall following elections which threw Europe's second-largest economy into political chaos.
There was some support for the euro from French and Italian elections but the week was set to be dominated by central bank meetings and UK Prime Minister Theresa May's efforts to form a workable administration after losing her majority.
With a fourth rise in U.S. rates in 18 months now fully priced-in for Wednesday, Bank of America Merrill Lynch's head of G10 currency strategy, Athanasios Vamvakidis, pointed to the chance of a weaker greenback after the meeting.
But he also warned that the Bank of Japan just over 24 hours later might prompt some more retracement of the yen's 4-percent gain since mid-May.
"The hike by the Fed is fully priced but the language will be dovish," Vamvakidis said.
"What will be interesting will be the BOJ - there have been headlines that the BOJ has been discussing an exit from emergency stimulus. They may well want to bite back against that (and) the yen has come a long way in the past few weeks."
The dollar was marginally lower at 110.21 yen , having retreated from Friday's one-week high of 110.815 yen. Against the euro it dipped a quarter percent to $1.1222 , compared to a seven-month low of $1.1285 set in early June.
As May scrambles to pick up the pieces and reunite her Conservative Party before Brexit negotiations due to start next week, the economic signs for the pound continue to worsen.
Figures from credit card firm Visa showed British consumers cut their spending for the first time in nearly four years last month, as households turned more cautious even before the shock election result. Against that is the hope of a softer approach to the Brexit talks that Friday's election results have engendered in markets.
Worries that the process would take Britain out of the lucrative European single market have left the pound around 20 cents weaker than when Britain voted to leave the European Union a year ago.
"Based on parliament as it stands, Theresa May would be able to approve a soft Brexit but not a hard one," said Bank of America Merrill Lynch's Vamvakidis.
Sterling fell another half a percent in morning trade, sinking as low as $1.2681 , and 88.45 pence per euro.
"Our forecasts are under review but we have been one of the more bullish houses on the street and it is fairly clear that the risks are to the downside," said Barclays' strategist Hamish Pepper.
"The uncertainty that the result brings means that you have a degree of risk premia re-establishing itself. The currency is vulnerable to that in the near term."
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url= (Writing by Patrick Graham; Editing by Andrew Heavens)Keywords: GLOBAL FOREX/
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