Sterling fell against the dollar after three sessions of gains. Still, having hit a record low on Monday, the pound ended the week higher, after the Bank of England bought British government bonds, known as gilts, on Wednesday, Thursday and Friday.
Data on Friday showed euro zone inflation beat forecasts and hit 10.0% in September, reinforcing expectations of another big rate hike from the European Central Bank next month.
The British pound, after hitting $1.1235, fell to $1.1112.
The euro lost 0.3% to $0.9782. The greenback rose 0.1% against a basket of currencies and posted its biggest quarterly gain since the first quarter of 2015 (nearly 8%).
On a weekly basis, however, the index posted its first drop in three weeks, down 0.7%.
The US Federal Reserve, which has raised US borrowing costs faster in 2022 than at any time since the 1980s, had one less reason to hold back.
The Commerce Department said the Fed’s benchmark personal consumption expenditures (PCE) price index rose 6.2% year-on-year in August.
“Today’s inflation data surprised to the upside yet again. That will keep upside pressure on interest rates and the dollar,” said Adam Button, chief currency analyst at Forexlive, a Toronto currency research firm.
However, on the last day of the quarter, Button noted that “fundamental considerations often take a backseat” as investors work to balance their positions or take profits.