* Dollar drifts, next week’s US data awaited for inflation cues
* Commodity currencies hold gains after oil bounce
* Pound hits 3-day high after hawkish comments from BoE’s Forbes
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Jemima Kelly
PARIS, June 23 (Reuters) - The dollar dipped to a four-day low against a basket of major currencies on Friday, as traders looked to U.S. inflation data due next week to provide more clues on the Federal Reserve’s policy outlook.
The Fed raised interest rates for the second time in three months last week, signalling its confidence in a growing U.S. economy and strengthening jobs market. But investors are pricing in only around a 50 percent chance that it will hike rates again by the end of the year.
The dollar index, which measures it against a basket of six major currencies, inched down by a quarter of a percent, leaving it almost exactly where it was trading immediately after last week’s hike.
“More than a week after the FOMC lifted borrowing costs in the U.S., financial markets... have been treading water as investors struggle to find a new driver,” said Swissquote currency analyst Arnaud Masset.
The euro edged up 0.2 percent to $1.1174, having earlier hit a four-day high but having then eased after data showing euro zone business growth tailed off unexpectedly toward the end of the first half of 2017.
The European Central Bank is watching such growth indicators carefully as it decides when and how quickly to wind back its expansive quantitative easing (QE) programme.
UBS currency strategist Daniel Trum, in Zurich, said currency markets were not showing great sensitivity to data, but that the euro had been lifted this week by consumer confidence hitting a 16-year high in June.
The dollar peaked at a one-month high on Tuesday after the Federal Reserve hiked interest rates last week and left the door open for further monetary tightening later in the year. But it has been stuck in a tight range since, awaiting fresh catalysts.
U.S. data due next week include the June consumer confidence indicator, pending home sales, crude oil inventories, revised first quarter GDP and the PCE price index.
“While most U.S. indicators bear watching, what really matters for the dollar are wages and inflation-related data, culminating with the non-farm payrolls in two weeks’ time,” said Makoto Noji, a senior strategist at SMBC Nikko Securities.
Commodity-linked currencies held to significant gains made on Thursday following a rebound in crude oil prices from 10-month lows. The Canadian dollar was flat at C$1.3236 per U.S. dollar after rallying 0.75 percent on Thursday.
Exactly a year after Britain voted to leave the European Union, sterling was around a third of a percent stronger on the day at $1.2727, with some investors betting the Bank of England could raise interest rates as soon as August.
In the year since the vote, the pound has fallen more than 15 percent against the dollar and almost 13 percent versus the euro.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
Reporting by Jemima Kelly; Additional reporting by Shinichi Saoshiro in Tokyo Editing by Jeremy Gaunt and John Stonestreet