By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) - The dollar dropped for a fifth straight session on Thursday, pressured by softer-than-expected U.S. economic data and this week's robust performance by the euro and the British pound.
The Federal Reserve, at its last monetary policy meeting, said it was on hold after cutting interest rates three times this year. But some analysts suggested the Fed could reconsider that stance if U.S. economic data continues to underwhelm.
"You're looking at concerns that the U.S. economy is yet again slowing down just based on some poor numbers out of both ISM (Institute for Supply Management)," said Joe Trevisani, senior analyst at FXStreet.com.
Most currencies traded in tight ranges after conflicting headlines on whether a U.S.-China trade agreement can be reached before Dec. 15, when additional U.S. tariffs kick in on Chinese goods.
The focus was also on how much damage the trade war is causing.
German industrial orders fell unexpectedly in October, data showed.
U.S. reports such as weekly jobless claims and the trade deficit were mostly better than expected, but they are second-tier data and did not move the dollar much.
The trade deficit dropped to its lowest level in nearly 1-1/2 years in October to $47.2 billion, the smallest since May 2018. Initial jobless claims dropped to 203,000 for the week ended Nov. 30, the lowest since mid-April.
That data followed Wednesday's dismal figures on private payrolls and services activity, and Monday's poor U.S. manufacturing activity index and construction spending figures.
Manufacturing activity in the euro zone beat expectations.
In afternoon trading, the dollar index was down 0.2% at 97.43654 <.DXY>.
UBS, in a research note, said the dollar could come under pressure next year, as it expects the United States to contribute less to global demand growth.
"The European economy and European exporters in particular should benefit if trade tensions subside. In such an environment, the euro/dollar exchange rate has clear upside potential." the bank said.
The euro <EUR=> rose 0.2% versus the dollar to $1.1102, while the dollar slipped 0.1% against the yen to 108.76 yen <JPY=>.
Sterling is this week's biggest gainer, up 1.7% to the dollar, as it appeared likely the ruling Conservative Party will win a majority in next week's election and end 3-1/2 years of Brexit-related uncertainty.
The British pound traded at a seven-month high of $1.3165 and extended gains against the euro to a 2-1/2-year high of 84.28 pence
The pound was last up 0.3% versus the dollar at $1.3155 <GBP=D3>.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Alison Williams and David Gregorio)