LONDON, Oct 20: The dollar was under pressure against the euro here on Friday in response to weak US manufacturing data.

The single European currency, while weaker against the dollar, nonetheless managed to preserve most of the gains made on Thursday.

The euro in late-day trade was at 1.2609 dollars after 1.2626 late Thursday in New York.

The dollar was meanwhile trading at 118.70 yen against 118.17 on Thursday.

In the United States the Philadelphia business activity index, which measures manufacturing activity in the Philadelphia region, slumped further in to minus 0.7 in October from minus 0.4 in September, confounding market expectations for a solid improvement.

"The dollar has come under a good deal of pressure of late courtesy of US economic data that have cast some doubt on the strength of underlying economic activity and associated inflationary pressures at a time of falling oil prices (until the overnight OPEC cut)," said Simon Derrick, analyst at the Bank of New York.

"The damage to the dollar this week has been wrought by weaker than expected consumer and producer price data and particularly poor activity figures (such as the October Philly Fed)," he added.

Attention is now likely to turn to next week's US data, which include new and existing home sales, durable goods orders and third quarter growth figures.

Also firmly in focus will be next week's meeting of US rate-setters for further clues on when US interest rates could be heading down.

Many currency investors are concerned that softer US economic data may prompt the US Federal Reserve to cut the cost of borrowing some time soon.

"With softer data likely to revive Fed-easing expectations, and the carry and risk environment expected to be less friendly, we expect the dollar to come under renewed pressure over the three-month time horizon, continuing to target the euro at 1.30 dollars over three months," said UBS currency strategist Daniel Katzive.

The major mover among currencies on Friday was the pound, which rose to two-week highs against the dollar after strong third-quarter GDP figures firmly cemented expectations that the Bank of England will raise interest rates on November 9.

Data showed British gross domestic product grew by 0.7 per cent in the third quarter from the second, in line with analysts' forecasts, and by 2.8 per cent from a year earlier, the highest annual rate since the third quarter of 2004.

This marks the fourth consecutive quarter of above-trend growth, estimated by most commentators at a quarterly 0.6pc.

"The data should keep the (Bank of England) on track for a November rate hike," said UBS' Katzive.

The euro was changing hands at 1.2609 dollars against 1.2626 dollars on Thursday, 149.71 yen (149.21), 0.6699 pounds (0.6722) and 1.5875 Swiss francs (1.5874). — AFP