* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (New throughout)
NEW YORK, Oct 25 (Reuters) - The dollar strengthened on Friday after U.S. and Chinese trade officials neared finalizing parts of the Phase 1 trade pact, according to the U.S. Trade Representative's office.
A statement issued by the USTR following Friday's negotiations said "They made headway on specific issues and the two sides are close to finalizing some sections of the agreement. Discussions will go on continuously at the deputy level, and the principals will have another call in the near future."
The statement provided no details on the areas in which progress was made.
The dollar index was 0.20% higher in afternoon trade to 97.826. Against the euro, the dollar was 0.21% higher to $1.108.
"At the end of the day, much of the drive for foreign exchange rates this past year has come from global trade tensions, so anything that affects that narrative positively or negatively is going to be a bigger driver than day-to-day data at this point," said Shahab Jalinoos, global head of foreign exchange strategy at Credit Suisse, noting that the next major event would be the APEC summit in mid-November.
The dollar had strengthened earlier in the day against the pound, but some of those gains were reversed after the European Union agreed to London's request for a Brexit deadline extension but set no new departure date, giving Britain's divided parliament time to decide on Prime Minister Boris Johnson's call for a snap election.
Against the pound, the dollar was up 0.19% to $1.283.
Some focus will shift next week to the U.S. Federal Reserve's two-day policy meeting. The central bank is expected to announce on Oct. 30 the third interest rate cut of the year. Money markets have largely priced in a quarter-percentage-point reduction, according to Refinitiv data.
"I think the Fed is largely priced to deliver a cut. If it doesn't the dollar would benefit," said Jalinoos, "unless it is very dovish in not delivering a cut. If it delivers a cut and it sounds like it's the end of a cutting cycle, that would also be dollar positive."
(Reporting by Kate Duguid in New York and Olga Cotaga in London Editing by Paul Simao and Chizu Nomiyama)