The U.S. dollar edged lower in early European hours Friday, consolidating after the previous session's strong gains, with traders wary ahead of next week's Federal Reserve meeting.

At 03:00 ET (07:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 100.480, after gaining 0.5% overnight.

The index is on course for a gain of around 1% this week, bouncing off the 15-month low seen earlier in the week.

GBP/USD rose 0.2% to 1.2891, after British retail sales rose 0.7% on the month in June, more than the 0.2% rise expected. This is still 1.0% lower than a year earlier but beat forecasts for a 1.5% decline.

EUR/USD rose 0.1% to 1.1139, bouncing after having dropped 0.6% on Thursday, as the dollar appreciated.

The European Central Bank is expected to raise interest rates by 25 basis points next week, and traders will be looking for guidance of future policy with a number of policymakers having sounded more dovish ahead of their blackout period.

USD/JPY rose 0.1% to 140.17 after data showed Japan's consumer price index rose 3.3% in June from a year earlier, remaining above the Bank of Japan's 2% target.

The Japanese central bank is expected to hold policy steady next week, including its yield control scheme, but it could revise up this year's inflation forecast, pointing to future tightening.

Source: Investing.com