(Recasts; adds analyst quote, background on Brexit; updates prices)
The dollar fell against the euro on Tuesday as U.S. consumer prices rose weakly, while sterling seesawed in the hours before Britain's parliament was to vote on Prime Minister Theresa May's Brexit deal.
May battled to win support for her plans for an orderly exit from the EU, but as of Tuesday had failed to win over the main Brexit faction in her own party, while Northern Ireland's Democratic Unionist Party (DUP), which props up her minority government, said it would vote against her.
"If this vote is not passed tonight, if this deal is not passed, then Brexit could be lost," May told lawmakers in the House of Commons.
Sterling was last 0.7 percent weaker at $1.3064 GBP= after trading in a wide range over the course of the day.
"We're seeing a huge range in the price of the pound, a 2 percent spread at any time," said Minh Trang, senior foreign exchange trader at Silicon Valley Bank. "The direction is going to be headline driven until we get some more substance."
Also on Tuesday, the dollar was weaker against the euro after U.S. consumer price data showed that inflation remains low despite a tight labor market, bolstering the likelihood the Federal Reserve would keep interest rates unchanged.
The U.S. consumer price index rose for the first time in four months in February, but the pace of the increase was modest, resulting in the smallest annual gain in nearly 2-1/2 years.
The dollar index .DXY , which measures the greenback against a basket of six rivals, fell and was last down 0.22 percent on the day at 97.002.
The euro EUR= strengthened against the dollar, last trading at $1.129, up 0.37 percent. Against the Japanese yen JPY= , the dollar was 0.09 percent stronger at 111.29 yen, paring earlier gains.
The Fed has cited a lack of inflationary pressure as one of the reasons it has felt comfortable pausing its interest-rate hiking cycle. The central bank uses the core personal consumption expenditures (CPE) price index to track inflation against its 2 percent target, but Tuesday's CPI reading nevertheless offers insight into the state of U.S. inflation.
Slowing domestic and global growth is keeping inflation in check even as a tight labor market is driving up wages. Annual wage growth in the United States was 3.4 percent in February, the biggest increase since April 2009, compared with 3.1 percent in January.
