The U.S. dollar steadied Friday after losing ground the previous session on weak jobs data, while the pound gained in the wake of stronger-than-expected growth numbers.

At 04:10 ET (08:10 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded just higher at 105.115.

Dollar on track for small gains this week

The dollar steadied Friday, and is course for minor gains this week after losses on Thursday following the release of data showed a bigger-than-expected increase in weekly jobless claims.

This evidence of a cooling U.S. labor market reinforced some expectations that the Federal Reserve will begin cutting interest rates by September. 

However, sticky inflation remains a key point of contention for the Fed, with a slew of officials warning as much this week, comments which boosted the dollar this week.

There is "considerable" uncertainty about where U.S. inflation will head in coming months, San Francisco Federal Reserve President Mary Daly said on Thursday.

"In a scenario where inflation stays ... level, just doesn't make much further progress, then it's not appropriate to start adjusting the rate unless we see the labor market faltering,” she added.

These comments put upcoming consumer price index data, due next week, squarely in focus for more cues on interest rates.

Sterling benefits from strong growth data

In Europe, GBP/USD gained 0.1% to 1.2534, recovering from its lowest level since April 24 on Thursday, after data released earlier Friday showed that Britain's economy grew by the most in nearly three years in the first quarter of 2024.

U.K. gross domestic product expanded by 0.6% in the three months to March, the strongest growth since the fourth quarter of 2021, as the country’s economy exited the shallow recession it entered in the second half of last year.

On a monthly basis, the economy grew by 0.4% in March, faster than the 0.1% growth forecast.

The Bank of England held interest rates at a 16-year high on Thursday, but two of the nine-person Monetary Policy Committee voted for a cut, suggesting that the central bank is moving towards such a reduction.