By James Ramage

The dollar eased against the euro and the British pound on Friday as lukewarm U.S. data reflected a mildly slowing economy and diminishing confidence among Americans to spend money.

The euro inched up 0.1% to $1.0899 and has increased 0.7% for the week. The pound rose 0.3% to $1.4879 but has slipped 0.4% lower this week.

The dollar continued to hover in tight trading ranges against rivals, a departure from the steep ascent it had taken since last summer on expectations that the Federal Reserve would raise interest rates from zero this year. Such a move, at a time when other central banks are cutting rates or printing money to buy bonds, would boost demand for U.S. assets and the dollar.

On Friday, however, numbers for the final revision read of U.S. gross domestic product for the last three months of 2014 came in below forecasts, reviving investors' caution about when the Fed might raise rates.

"Rate hikes in June and September seem too early," said Lennon Sweeting, dealer at USForex, which helps U.S. corporations hedge their currency exposure. "If metrics continue on the path they're on right now, and the dollar continues to trade near current levels, the Fed would be hard-pressed to hike rates before the fourth quarter."

The GDP grew at an annual rate of 2.2% in the fourth quarter, the Commerce Department said. The number, unchanged from its previous estimate in February, fell below economists' predictions of an upward revision to 2.4% growth.

In addition, the University of Michigan final March sentiment index showed a reading of 93.0, lower than the final February reading of 95.4. Foul weather and an uptick in gasoline prices discouraged lower-income Americans from spending.

Next week, investors will look to personal consumption expenditures, the Fed's preferred measure for inflation, and the February jobs report for direction on the dollar.

In other trade, the dollar held flat against the Japanese yen, at Y119.16, and has declined 0.7% for the week.

Write to James Ramage at james.ramage@wsj.com

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