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* Investors focused on Fed policy
* U.S. consumer price inflation rises
* Pound gains on possible Brexit delay
By Karen Brettell
NEW YORK, Oct 18 (Reuters) - The U.S. dollar was mixed in choppy trading on Tuesday as investors took some profits from the greenback’s recent strength and evaluated whether the Federal Reserve is likely to raise interest rates later this year.
The greenback had rallied around 3 percent since the end of September, mirroring a climb in benchmark U.S. Treasury yields to a four-month high above 1.8 percent on expectations that the Fed will raise rates by December.
“The dollar’s gotten stronger as more people think the Fed will hike rates in December,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
Weaker U.S. economic data in the past few days, including disappointing retail sales on Friday, has led investors to book some profits.
“We’ve had some disappointing U.S. economic data, I think that it’s spurring a little bit of a correction. It’s mostly a technical correction after the run up,” said Chandler.
The dollar index, which tracks the greenback against a basket of six major currencies, was last up 0.06 percent at 97.954 after weakening earlier in the day.
The dollar briefly added to weakness, before reversing course and then rallying, after data on Tuesday showed consumer prices rose in September.
The Labor Department said its Consumer Price Index increased 0.3 percent last month. In the 12 months through September, the CPI rose 1.5 percent, the biggest year-on-year increase since October 2014.
The dollar move largely tracked U.S. Treasury yields, which initially fell on the data before reversing course and rising, said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.
“It’s tracking the bond market most market participants are looking at the Fed for a potential hike in December and as the odds of that increase or decrease there’s some correlation with how the dollar’s moving,” Scalone said.
The British pound was one of the best performers after a government lawyer said parliament would “very likely” have to ratify any deal to take Britain out of the European Union, and following stronger-than-expected inflation numbers.
“That took a market that was overly short and put in a little bit of uncertainty to whether Brexit would be enacted sooner rather than later. That has squeezed some of the shorts,” said Scalone.
The pound was last up 0.92 percent against the dollar at $1.2294. (Editing by Meredith Mazzilli)