NEW YORK: The dollar strengthened against a basket of currencies on Thursday on encouraging US inflation and labor data, while sterling weakened after the European Union allowed Britain to postpone its exit from the bloc for a second time.

The euro remained under pressure a day after European Central Bank President Mario Draghi made glum comments on the euro-zone economy.

First-time filings for US jobless benefits dropped to a 49-1/2-year low last week, pointing to sustained labor market strength that could counter fears of a sharp slowdown in US economic growth. Overall producer prices grew 0.6% in March, the most in five months, while the underlying wholesale inflation rose by a milder 0.3%.

The dollar was trading higher "off the back of a very low jobless claims number and fairly robust PPI numbers. Overall, what you're seeing is a shift into dollars on fading expectations for a rate cut later this year," said Karl Schamotta, director of foreign exchange strategy and structured products at Cambridge Global Payments.

A few Federal Reserve policymakers, in separate comments on Thursday, indicated that current interest rates were appropriate. A couple expressed concerns about the recent inversion of the US yield curve as an omen for a slowdown.

"We are going to need deviations to the downside on inflation or the real economy or both" to justify a rate cut, St. Louis Fed President James Bullard told reporters.

In late US trading, an index that tracks the dollar versus a basket of currencies was up 0.21% at 97.153. The dollar index has held in a tight 0.5-point range this week.

The euro fell in the aftermath of Draghi's comments on Wednesday, which underscored the risks facing the euro zone economy and supported the view of possibly more ECB stimulus to prevent the region from slipping into recession.

The single currency was 0.13% lower at $1.12595 but was up 0.46% at 125.7 yen.

Sterling was 0.24% weaker at $1.3057 and 0.15% lower at 86.23 pence.

EU leaders late Wednesday extended the deadline for Britain to leave the economic bloc, quelling concerns of an immediate, chaotic departure. The move was offset by the prospects of UK Prime Minister Theresa May's replacement, a general election and the threat to the UK economy of prolonged uncertainty.

"Concern around Brexit and the ECB's increasingly dovish stance is weighing on euro and sterling," said Schamotta.