Fed fund futures have also reduced the amount of 25-bps rate cuts this year to two, or 46 bps, from three or four a few weeks ago.
The European Central Bank hinted Thursday that it could drop rates as soon as June, unlike the Fed.
Interest rate expectations have increased the spread between U.S. bond and German euro zone yields to its biggest level since 2019. That raised the dollar and made U.S. bonds more appealing.
Economic statistics on Friday showed U.S. import prices rose for a third straight month in March due to gasoline and food prices, but underlying imported inflation pressures were low.
A separate University of Michigan survey found that April U.S. consumer confidence deteriorated but inflation expectations rose for the next year and beyond.
Sterling fell 0.9% to $1.2445 from $1.2426, its lowest since Nov. 17. It would be the pound's biggest weekly decline since mid-July.
After the dollar strengthened, the yen rose. Dollars reached 153.39 yen, its highest since mid-1990, and ended at 153.19, down 0.1%.
Finance Minister Shunichi Suzuki said: "If there are excessive moves, we will respond appropriately without ruling out any options." This seems to have reduced yen moves. The Japanese currency was expected to decrease 0.8% against the dollar for the second week in a row.
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