( AFP ) - The pound was weaker after comments from the Bank of England's rate-setter Kate Barker, who said the UK economy is not moving back to a high inflation environment.
Next week's data and news will be crucial for the momentum of the pound, with the release of CPI and GDP data as well as the minutes to the Bank of England's last policy meeting.
The BoE cut interest rates at that meeting, and the minutes will be scoured for the extent to which rate-setters are worried about growth and inflation.
Elsewhere, the dollar extended an impressive rally Friday, driven by both fundamental economic considerations as well as technical flows.
US inflation surprised on the upside, with CPI up a monthly 0.8 percent in November, above expectations for a more modest 0.7 percent rate. Core CPI also accelerated, to a 0.3 percent monthly gain from a 0.2 percent rate last month.
This suggests the Federal Reserve will be more limited in its freedom to respond to weakening growth by means of rate cuts.
Analysts have also noted that the dollar has been supported by seasonal flows of funds into the US, exacerbated by US companies repatriating capital in order to offset tight liquidity.
Furthermore, steady appreciation in the Chinese yuan and a downtrend in base metal prices should continue to provide some support to the dollar for the rest of the month.
The euro softened against most currencies, as the drop against the dollar put it under pressure elsewhere as well.
Sterling 1615 GMT 1403 GMT
2.0219 US dollar down from 2.0251
1.3997 Euro up from 1.3968
229.02 Yen up from 228.70
2.3295 Swiss franc up from 2.3281