Investing.com - The dollar was hovering at a two-month peak against the other major currencies on Friday, as investors awaited the release of key U.S. employment data amid growing expectations for a rate hike before the year end.
EUR/USD fell 0.22% to a two-month low of 1.1124.
The dollar remained supported after data on Thursday showed that U.S. initial jobless claims decreased by 5,000 to 249,000 in the week ending October 1. Analysts had expected jobless claims to rise by 3,000 to 257,000 last week.
Market participants were awaiting the U.S. nonfarm payrolls report due later in the day for further indications on the strength of the job market, as the Federal Reserve has indicated that future interest rate decisions will be data-dependent.
GBP/USD tumbled 1.82% to trade at a fresh 31-year low of 1.2389.
The U.K. Office for National Statistics said that manufacturing production increased by 0.2% in August, disappointing expectations for a 0.5% gain. Year-on-year, manufacturing production rose 0.5% in August, compared to forecasts for a 0.9% increase.
The report also showed that industrial production fell by 0.4% in August, confounding forecasts for a 0.1% rise.
A separate report showed that the U.K. trade deficit widened to £12.11 billion in August from a revised £9.51 billion in July. Analysts had expected the trade deficit to hit £11.30 billion in August.
Market analysts believe that an overnight "flash crash" of the pound was intially driven by computer-initiated sell orders.
But concerns over a potential ‘hard Brexit’ have been weighing heavily on the pound all week, especially since U.K. Prime Minister Theresa May said on Sunday that she would trigger the process of leaving the European Union by the end of March.
In addition, French President Francois Hollande said on Thursday that the EU needed to remain firm with Britain in the Brexit negotiations.
Elsewhere, USD/JPY slipped 0.10% to 103.84, just off the previous session’s one-month peak of 104.16, while USD/CHF added 0.14% to 0.9822.
The Australian and New Zealand dollars were weaker, with AUD/USD down 0.15% at 0.7575 and with NZD/USD dropping 0.52% to 0.7127.
Elsewhere, USD/CAD gained 0.33% to trade at 1.3257, the highest since September 28.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.40% at 97.06, the highest since July 27.