Most Asian currencies kept to a tight range as the dollar headed for a strong weekly performance, while the Japanese yen stemmed some recent losses following strong producer inflation data. 

The yen was also aided by speculation over whether Tokyo will intervene in currency markets, after ministers expressed some discomfort over sustained selling of the currency. 

Weakness in the yen– which is a component of the DXY dollar index, was one of the key drivers of the greenback’s resilience this week, even as sentiment towards the U.S. economy remained weak amid an ongoing government shutdown.

Other Asian currencies kept to a tight range, and were sitting on a muted weekly performance amid pressure from a stronger dollar.  

GBP/USD inches higher after three days of losses, trading around 1.3310 during the Asian hours on Friday. The pair may appreciate as the Pound Sterling (GBP) may gain ground amid cautious sentiment surrounding the Bank of England’s (BoE) monetary policy stance.

The BoE policymaker Catherine Mann said on Thursday that the monetary policy must remain restrictive for longer to create an environment conducive to growth. Mann also added that " Inflation remains persistent and the outlook for growth remains modest," per Reuters.

UK Chief Secretary to the Treasury James Murray said in a letter shared by the finance ministry on Wednesday that the administration would not permit agencies to use emergency funds to fund pay rises, aiming to restrict the wage spiral. “This prudent but tough approach to public spending is what will help build a stable economy," Murray added.

However, the GBP/USD pair may further lose ground as the US Dollar (USD) could receive further support from increased risk aversion, driven by the ongoing government shutdown. The US Senate remained deadlocked on legislation to end the government shutdown.

However, the Greenback may struggle due to prevailing dovish sentiment surrounding the US Federal Reserve’s (Fed) policy outlook. Fed Bank of San Francisco President Mary Daly said on Friday that inflation has come in much less than she had feared. Daly further stated that the US central bank is projecting additional cuts in risk management.

The EUR/USD pair gains ground around 1.1575, snapping the four-day losing streak during the Asian trading hours on Friday. The potential upside for the major pair might be limited as the political turmoil in France weighed on the Euro (EUR). The preliminary reading of the U-Mich Consumer Sentiment report will be in the spotlight later on Friday.

French President Emmanuel Macron will name a new Prime Minister by Friday evening, per the Guardian. France’s longstanding political crisis deepened this week when the Prime Minister, Sébastien Lecornu, resigned after 27 days in office. "In France, turmoil following the resignation of Prime Minister Lecornu has undermined EUR sentiment," said Kieran Williams, head of Asia FX at InTouch Capital Markets.

Across the pond, the US government shutdown entered its tenth day on Friday as the Senate rejected funding bills from lawmakers that had the potential to bring the shutdown to an end. The shutdown has caused a delay in official US economic data, which complicates the Federal Reserve’s (Fed) decision-making on interest rates. Concerns over a prolonged US federal shutdown could undermine the Greenback and create a tailwind for the major pair. 

New York Fed President John Williams said on Thursday that he would be comfortable with cutting interest rates again. Meanwhile, San Francisco Fed President Mary Daly noted on Friday that inflation has come in much less than she had feared, adding that the US central bank is projecting additional cuts in risk management.