LONDON: The British pound edged lower on Friday but remained close to a 10-month high against the dollar, supported by improving appetite for risk ahead of a big week of British data that could provide clues on the outlook for monetary policy.

The pound briefly hit its highest level since June 2022 at $1.2545 per dollar on Friday before easing back. It was last down 0.1% at $1.2511.

“The catalyst is positive global risk sentiment and broad-based dollar weakness as markets position for a Fed pause,” said George Vessey, FX and macro strategist at Convera.

The dollar index, which measures the US currency against six others including the pound, was last down 0.04% and was on track for its longest stretch of weekly losses since 2020, as traders bet on interest rate cuts from the Federal Reserve this year.

In contrast, markets price in around a 65% chance the Bank of England will raise rates by 25 basis points next month and expect another 45 basis points of tightening by year-end.