LONDON — The U.S. dollar steadied on Friday but was still set for its third straight weekly drop, hurt by the prospect of rate cuts next year, while sterling was also unchanged after data showed the U.K. economy unexpectedly shrank in the three months to October.

The dollar index, which measures the U.S. currency against six peers, was flat at 98.34, set for a weekly drop of 0.64 per cent. The index is down more than 9 per cent this year, on pace for its steepest annual drop since 2017.

Against the weak dollar, the euro last bought US$1.1737 after a 0.37 per cent rise to a more than two-month high on Thursday. The pound was firmer at US$1.3383, trading near a seven-week high hit on Thursday, after economic data that was likely to boost expectations for Bank of England interest rate cuts.

Both European currencies are poised for their third-straight week of gains against the dollar.