The dollar was steady while sterling crosses nursed losses on Thursday in holiday-thinned trade ahead of the last major data release of the year in Friday's U.S. inflation figures.
Sterling suffered its sharpest drop on the dollar in two months on Wednesday after British inflation dived below forecasts to an annual 3.9% in October, a two-year low.
The currency fell 0.7% to $1.2638 as traders priced in Bank of England rate cuts as soon as May. On Thursday it hit a one-week low of $1.2618.
Against the euro the pound hit its weakest in more than three weeks at 86.78 pence.
Analysts forecast a similar easing for Friday's U.S. core personal consumption expenditure (PCE) data, with the annual inflation rate seen slowing to its lowest since 2021 at 3.3%.
But given the dollar has been on the back foot for weeks and 150 basis points of Federal Reserve cuts are already priced in for 2024, caution held off any further dollar selling, for now.
Heavy selling in the final hour of equities trade on Wall Street had also sent a ripple of risk-aversion through markets, even as stock futures steadied.
The mood helped the safe-haven yen along with Japan lifting its growth projection for the fiscal year to 1.6%.
The yen rose about 0.2% and last traded at 143.24 per dollar, having earlier risen to 142.81 per dollar.
It has still lost more than 8% on the dollar this year as the Bank of Japan has steadfastly kept short-term rates negative, against 300 basis points of U.S. interest rate hikes.
The euro was stable at $1.0941.
The Australian and New Zealand dollars traded just below Wednesday's five-month highs. The Aussie was last at $0.6744, having touched its highest since July at $0.6779 a day earlier. The kiwi traded at $0.6251.
The dollar index , down 1% for the year so far, was steady at 102.40. Ten-year Treasury yields had hit a seven-month low of 3.847% on Wednesday.
Source : Reuters
