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Investing.com – The US dollar fell in early European trade on Friday, giving up some of the gains made overnight, while the British pound rallied after the release of first-quarter growth data in the United Kingdom.
At 03:15 EST (07:15 GMT), the dollar, which measures the greenback against a basket of six other currencies, was trading down 0.1% at 101.785, on track for gains of less than 1% this week, Ending a two-week losing streak.
Data released Thursday showed that the number of Americans filing for unemployment benefits jumped to the highest level in a year and a half last week, while it rebounded modestly in April.
This suggests that the US may halt the monetary tightening cycle in June, an outlook that has weighed on the dollar for most of the year.
However, the dollar got a boost on Thursday, as the index rose to its highest level since May 2, due to the uncertainty surrounding a hike in the US debt ceiling.
A meeting between US President Joe Biden and top lawmakers on the topic that was scheduled for Friday has been postponed, and the US federal government may run out of money to pay its bills as soon as June 1 unless the debt ceiling is raised.
“The rebound in the dollar seen yesterday was the result of some squaring the position and less than consensus data,” ING analysts said in a note, while the still volatile risk environment due to recession fears and the US debt ceiling crisis continues to create fertile ground for more positions. Defensive Foreign Exchange.
Elsewhere, it rose 0.2% to 1.2535, bouncing back after data showed the UK grew 0.1% in the first three months of 2023, despite an unexpectedly sharp drop of 0.3% in March.
Interest rates rose by 25 basis points on Thursday, marking the 12th consecutive rate hike as it tries to combat still-sub double-digit inflation.
ING added: “Although we are not excluding a recent rally in June, our bottom line is that we have reached the peak of the BoE tightening cycle in which inflation will start to slow rapidly this year.”
It rose 0.2% to 1.0930, and rose 0.2% to 134.83, with the yen set to post small weekly gains on safe-haven demand, while it fell 0.1% to 0.6694.
It dropped to 6.9463, but remained close to the psychologically important level 7 against the dollar amid doubts about the strength and speed of the Chinese economy’s recovery.