"wealh" meaning "foreigner" was an AS word which was applied to people from the kingdom of Strathclyde (which stretched from Wales up to the Dumbarton area). it is dervied from the Germanic root "walh-" meaning "foreign". in it's adjective form "waelisc" it gives us Welsh, and in its plural "wealas" it gives us Wales, and is the origin of the name Wallace

on a bit of a tangent, it is also the origin of the walnut, "the foreign nut", appearing as "walhhnutu" in 1050

Cheers
Andy