Investing.com – The US dollar steadied on Friday after losing ground in the previous session on weak jobs data, while the British pound rose in the wake of stronger-than-expected growth numbers.
At 04:10 ET (08:10 GMT), the dollar index, which tracks the US currency against a basket of six other currencies, was trading higher at 105.115.
The dollar is on track to make small gains this week
The dollar stabilized on Friday, and is heading towards slight gains this week after losses on Thursday following the release of data that showed a larger than expected increase in the week.
This evidence of a slowing US labor market has fueled some expectations that interest rate cuts will begin by September.
However, flat inflation remains a major point of contention for the Federal Reserve, with a slew of officials warning this week, comments that have strengthened the dollar this week.
San Francisco Federal Reserve President Mary Daly said Thursday there is a great deal of uncertainty about where U.S. inflation will head in the coming months.
She added: “In a scenario where inflation…remains at a level and does not progress further, it is inappropriate to start adjusting the rate unless we see the labor market faltering.”
These comments put the upcoming data, due next week, squarely in focus for further signals on interest rates.
The British pound benefits from strong growth data
In Europe, it rose 0.1% to 1.2534, rebounding from its lowest level since April 24 on Thursday, after data released earlier Friday showed that Britain's economy grew the most in nearly three years in the first quarter of 2024. .
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The UK expanded by 0.6% in the three months to March, the strongest growth since the fourth quarter of 2021, as the country's economy emerged from the shallow recession it entered in the second half of last year.
On a monthly basis, the growth rate increased by 0.4% in March, which was faster than the growth forecast of 0.1%.
It kept interest rates at their highest levels in 16 years on Thursday, but two members of the nine-person Monetary Policy Committee voted in favor of a cut, indicating that the central bank is moving towards such a cut.
It traded largely unchanged at 1.0783, with light calendar data providing little momentum.
It has promised to cut interest rates on June 6, but there is uncertainty about how many additional cuts the central bank will approve this year.
Pierre Funche, governor of the Belgian central bank, had advocated further action earlier this week, arguing that staying tight for too long was now a greater risk than easing too early.
Markets are currently pricing in a 70 basis point rate hike for this year.
USD/JPY is drifting higher
In Asia, it rose 0.2% to 155.70, trading well above the low of 152 points hit earlier in May.
Traders now see 160 as the new line in the sand for Japanese government intervention.
It rose 0.1% to 7.2249, with the yuan declining after reports that US President Joe Biden is considering imposing new sanctions on some Chinese industries, such as electric cars and batteries.
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While the economic impact of the tariffs was not clear, such measures could trigger retaliation from China, further straining relations between the world's two largest economies.
