* Dollar on pace to snap three-day winning streak
* Greenback reacts little to Q2 GDP data
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh (Adds U.S. market open; changes dateline; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Sept 28 (Reuters) - The dollar edged lower against a basket of currencies on Thursday, on pace to snap a three-day winning streak, as investors looked to take profits on the greenback’s rally this week ahead of the end of the quarter.
The dollar index, which tracks the greenback against six major currencies, was down 0.18 percent at 93.196. The index was coming off its strongest three-day performance in nine months.
“We had a big move yesterday. For us to take some of that back makes sense,” said Brad Bechtel, managing director FX at Jefferies in New York.
On Wednesday, the dollar rose against other major currencies after President Donald Trump proposed the biggest shake-up of the U.S. tax system in three decades.
Bechtel warned against reading too much into Thursday’s decline in the dollar, saying some of the move may be due to investors making quarter-end adjustments to positioning.
“From a sentiment perspective, the market is really getting behind the idea that they are going to be able to get something done (in terms of tax reform), something meaningful,” Bechtel said. “And you also have the Fed stuff percolating behind the scene.”
Federal Reserve Chair Janet Yellen said on Tuesday that the U.S. central bank needs to continue gradual rate hikes despite broad uncertainty about the path of inflation.
“You are getting a little bit of the one-two punch that we had back in January,” said Bechtel.
The dollar index surged to a 14-year high in January, spurred by expectations that the new U.S. administration would focus on pro-growth fiscal stimulus, tax cuts and regulatory reform that would likely lift inflation and prompt the Fed to raise interest rates more quickly this year.
But Trump’s inability to deliver on some of his promises spooked investors and the index slumped to its lowest since early 2015 earlier in September.
On Thursday, the dollar failed to react much to data that showed the U.S. economy grew a bit faster than previously estimated in the second quarter.
Meanwhile, Britain’s pound climbed to the day’s highs against the weakening dollar after the European Union’s chief negotiator Michel Barnier said “considerable progress” had been made on Brexit talks.
Sterling was up 0.43 percent to $1.3441.
The Canadian dollar steadied against its U.S. counterpart, recovering from an earlier four-week low as oil prices rose.
Reporting by Saqib Iqbal Ahmed; Editing by Meredith Mazzilli