(Updates pars 1-6 after Fed speech)
By Elizabeth Howcroft
LONDON, Aug 26 (Reuters) - The British pound fell on Friday, on track for a weekly loss after a hawkish speech by U.S. Federal Reserve Chair Jerome Powell boosted the dollar.
The dollar index strengthened after Powell said the U.S. economy will need tight monetary policy "for some time" before inflation is under control. Powell gave no indication of how high interest rates might rise.
The pound-dollar pair fluctuated as the dollar reacted to Powell's speech, hitting at one-week low of $1.1765.
At 1627 GMT, the pound was down 0.6% on the day at $1.177 , on track for a 0.5% weekly loss.
The euro was up 0.7% versus the pound, with the pair at 84.865 pence per euro.
Pound-investors also assessed the likely impact of an 80% rise in British household energy bills from October to an average of 3,549 pounds ($4,190) a year.
The regulator Ofgem said the rise was a crisis that needed to be tackled by urgent and decisive government intervention.
Inflation in Britain has hit a 40-year high, and the Bank of England has warned of a lengthy recession. Some bet the rising costs will lead to more government support for households.
"Leveraged funds have increased substantially long GBP positions in recent weeks. One possibility for doing that may be the belief that the incoming UK government will act forcefully to protect UK households," said MUFG head of research Derek Halpenny in a note to clients.
But he said that is a "risky bet" given a lack of certainty on what Liz Truss, the frontrunner to become British prime minister next month, plans to do for households.
Truss has previously said she does not believe handouts are the best way to help households through the cost-of-living squeeze and she prefers to focus on tax cuts.
But on Friday a campaign spokesperson said that Truss would ensure people get the support needed to get through tough times.
(Reporting by Elizabeth Howcroft; Editing by Barbara Lewis)