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NEW YORK, Dec 20 (Reuters) - The dollar firmed against other major currencies on Friday and was set for its best week since early November after a series of strong U.S. economic data releases which make a near-term cut in interest rates unlikely.
U.S. growth nudged up in the third quarter, the government confirmed on Friday, and there are signs the economy more or less maintained the moderate pace of expansion as the year ended, supported by a strong labor market.
Gross domestic product increased at a 2.1% annualized rate, the Commerce Department said on Friday in its third estimate of third-quarter GDP. That was unrevised from November’s estimate in line with economists’ expectations. Consumer spending, however, was stronger than previously reported, and there were upgrades to business spending.
Earlier this week, the U.S. reported that the domestic homebuilding market was regaining steam and the manufacturing sector was stabilizing. That has driven the dollar index up 0.43% this week. It was last up 0.22% on the day to 97.595.
This morning’s GDP and personal consumption figures are “indicators of the strength of the economy going into 2020,” wrote analysts at Western Union Business Solutions.
These figures “further strengthen the belief that the Federal Reserve will pause on interest rate cuts for the near future.”
Sterling was on firmer ground at the end of a bad week that has seen it take a beating from renewed concern over a hard Brexit. After hitting a 19-month high against the dollar last week on the back of Conservative Party leader Boris Johnson’s electoral victory, the currency dropped when the new prime minister revived the possibility that Britain could leave the European Union without a trade agreement.
The pound was last 0.47% stronger against the dollar, at $1.307 and up 0.81% against the euro at 0.848 pence. Nevertheless, the currency was set for its worst week against the greenback in over two years, and its largest weekly loss since July 2017 versus the euro.
More than three years since Britain voted to exit the European Union in a 2016 referendum, Johnson’s government will leave the political bloc at the end of January and has set Dec. 2020 as a hard deadline to reach a trade agreement.
In thin pre-holiday trade, the euro weakened by 0.33% to $1.108, while the Japanese yen was roughly unchanged against the dollar at 109.36 yen. (Reporting by Kate Duguid and Dhara Ranasinghe; editing by Nick Macfie)
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