* Greenback set for best week in six weeks
* Pound heads for worst week vs euro since July 2017
* Graphic: World FX rates in 2019 http://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 .DXY . 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 EUR=EBS , while the dollar was a touch
firmer at 109.39 yen JPY=EBS .
Against the Swiss franc, the dollar was 0.25% firmer at
0.98085 francs CHF=EBS , 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 GBP=D3 and up 0.4% at 85.14
pence per euro EURGBP=D3 . 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."