* U.S. third-quarter GDP growth revised higher
* Pound recovers, focus on polls after Conservative lead narrows (Updates to U.S. afternoon)
NEW YORK, Nov 27 (Reuters) - The dollar rose against a basket of currencies on Wednesday on upbeat U.S. data in subdued trading as uncertainty about a possible U.S.-China trade deal lingered during a U.S.-holiday shortened week.
U.S. economic growth picked up slightly in the third quarter, rather than slowing as initially reported, on a stronger pace of inventory accumulation and a less steep decline in business investment.
Separate data showed new orders for key U.S.-made capital goods increased by the most in nine months in October and shipments rebounded.
“The dollar is definitely supported by the data,” said Alfonso Esparza, senior currency analyst at OANDA in Toronto.
“The Fed has signaled that is done for the year and good data validates that thinking,” he said.
The U.S. Federal Reserve has cut interest rates three times this year and signaled its credit easing cycle might be on pause. Signs of U.S. economic strength is giving traders confidence the central bank will keep borrowing costs unchanged for now.
“The other thing is that this is basically the end of the week for U.S. markets and no one wants short dollar exposure going into the Thanksgiving weekend,” Esparza said.
The dollar index, which compares the greenback against six other major currencies, was up 0.15% at 98.399.
The index pared gains after U.S. data, excluding volatile food and energy components, showed the personal consumption expenditures (PCE) price index edged up 0.1% last month after being unchanged in September.
“A 0.1% m/m rise in the core PCE deflator left the Fed’s preferred core inflation rate at a well below-target 1.6%. That underlines that interest rates are unlikely to be raised again for the foreseeable future,” said Andrew Hunter, senior U.S. economist at Capital Economics.
While recent reports that the United States and China are close to agreement on the first phase of a trade deal have helped support risk sentiment, much uncertainty remains about the outlook for the trade talks.
Lingering trade tensions have generally supported the greenback as investors view the United States as relatively well-positioned to weather a full-blown trade war.
The Japanese yen, favored by nervous investors, has faltered in recent sessions as equity markets soared. On Wednesday, the dollar gained 0.47% to 109.54 yen.
Sterling was up 0.31% on Wednesday, recovering from early losses following the third poll in a row that showed a narrowing lead for the governing Conservative Party before Britain’s Dec. 12 election.
Investors awaited the release of the YouGov seat-by-seat predictions of the election outcome at 5 p.m. EST (2200 GMT). The multilevel regression and post-stratification model accurately predicted the 2017 hung parliament.
Editing by William Maclean, Ken Ferris, Tom Brown and Richard Chang
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