* Greenback set for best week in six weeks
* Pound heads for worst week vs euro since July 2017
* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh (Updates with BoE announcements, adds chart,)
By Dhara Ranasinghe
LONDON, Dec 20 (Reuters) - The dollar firmed against other major currencies on Friday and was set for its best week in six weeks thanks to a stronger tone to economic data that makes a near-term cut in U.S. interest rates unlikely.
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.
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.
A final reading of U.S. economic growth in the third quarter, due out later, was expected to get some attention.
Data this week has fueled expectations that the U.S. Federal Reserve is unlikely to cut interest rates again in the near future.
The dollar index was a touch firmer at 97.54. It has recovered almost 0.9% from five-month lows hit last week and is up 0.4% this week, poised for its biggest weekly rise since early November.
“The small bounce in the dollar index probably sets us up for slightly better levels to sell into next year,” said Jeremy Stretch, head of G10 FX Strategy at CIBC Capital Markets.
“We still favour a cheaper dollar, due to growth headwinds in the U.S. relative to elsewhere. There are also factors such as elevated political risk as we head into the presidential elections.”
In thin pre-holiday trade, the euro weakened a quarter of a percent to $1.10930, while the dollar was a touch firmer at 109.39 yen.
Against the Swiss franc, the dollar was 0.25% firmer at 0.98085 francs, rebounding from four-month lows hit against the safe-haven currency this week.
“We’ve held a constructive view on the dollar for two years and expect it to hold relatively steady in the first half of next year, then weaken against the euro as we think the Fed will have to cut rates again,” said Piotr Matys, a currency strategist at Rabobank.
Britain’s pound strengthened, having tumbled sharply from around 19-month highs against the dollar hit last week after a resounding election win for the ruling Conservative Party boosted hopes that near-term Brexit uncertainty would end.
It was 0.2% firmer at $1.3030 and up 0.4% at 85.14 pence per euro. Still, the currency was headed for its biggest weekly losses against the dollar and euro in over two years.
More than three years since Britain voted to exit the European Union in a 2016 referendum, Prime Minister Boris 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, knocking sterling.
“The market was always a little bit naive in a way to think that a Tory election win was going to remove the fog of Brexit,” said Ray Attrill, head of FX strategy at National Australia Bank. “There were obviously some longs in weak hands that got forced out.” (Reporting by Dhara Ranasinghe; Additional reporting by Tom Westbrook and Stanley White; Editing by William Maclean and Jan Harvey)