Investing.com – The U.S. dollar strengthened on Friday, maintaining recent gains ahead of the release of the hugely influential monthly jobs report, while sterling continued to lose ground.

At 0400 ET (0900 GMT), the Dollar Index, which tracks the dollar against a basket of six other currencies, was trading 0.1% higher at 109,040, on track for a weekly gain of 0.3%.

It would be the sixth straight weekly gain and the longest stretch since an 11-week streak in 2023.

Dollar maintains strength ahead of wages

The dollar traded near its highest levels since November 2022, maintaining recent gains as the United States returned from a vacation to honor the memory of former President Jimmy Carter.

Attention is mainly focused on December data, which will be released later in the session as investors look for further signals about the US economy and the future path of interest rates.

The Fed’s December meeting, released on Wednesday, showed that policymakers remain concerned about the possibility of inflation rising again, especially given the likely impact of expansionary and protectionist policies under President-elect Donald Trump.

U.S. nonfarm payrolls data are expected to show the economy added 154,000 jobs in December, up from 227,000 in November, while the interest rate remains at 4.2%.

Anything stronger will strengthen the case for fewer Federal Reserve rate cuts in 2025, which will strengthen the dollar.

“We believe the balance of risks for the dollar is tilted in the greenback’s favor today as solid employment data could lead markets to price in a March cut and potentially push the first full-scale move beyond June,” ING analysts said in a report note.

“We will continue to argue that with inflation concerns rising again – although Fedspeak has been quite mixed on this issue – next Wednesday’s CPI report could have deeper market implications.”

Sterling poised for massive weekly loss

In Europe, rising to 1.0303, supported by data showing it was up 0.2% on the month of November, an improvement on the previous month’s decline of 0.3% and above the expected decline of 0.1 %.

That said, the euro remains feeble, with the European Central Bank widely expected to cut interest rates by around 100 basis points in 2025, about double the cuts expected by the US central bank, with the regional economy still very feeble.

“At this stage, markets are pricing in many negative factors in the euro and it is possible that the euro will be penalized less than other G10 currencies if US employment remains strong today,” ING added.

was trading down 0.2% to 1.2285, with sterling on track to lose 1% this week after previously falling to a 14-month low following a sell-off in British government bonds amid worries about British finances.

“We expect higher yields to be an additional drag on economic growth as a result of household refinancing of mortgage loans and weaker investment,” Goldman Sachs analysts said in a note.

“The rise in bond yields reinforces our view that UK economic growth will disappoint in 2025, with our real GDP growth forecast of 0.9% well below consensus (1.4%), BoE (1.5%) and OBR (2%).”

Yuan lacks support

In Asia, it rose 0.3% to 7.3513, with the Chinese currency seeing further weakness following gentle inflation data for December released earlier this week.

The prospect of trade tariffs under Trump has also soured sentiment toward China.

fell 0.1% to 157.85, helped by the release of stronger-than-expected data earlier on Friday.

This was a consequence of a greater than expected boost in wage growth on Thursday and triggered increased speculation about the January interest rate boost by the Bank of Japan.