(Updated at 1005 EDT)

By Karen Brettell

NEW YORK, Aug 1 (Reuters) - The dollar gained on

Thursday as rising geopolitical tensions provided a safe haven

boost to the currency, while the British pound fell after the

Bank of England cut interest rates from a 16-year high.

Concerns about a widening conflict in the Middle East

intensified this week after Hamas leader Ismail Haniyeh was

assassinated in the Iranian capital Tehran on Wednesday morning,

an attack that drew threats of revenge on Israel.

"We are looking at the threat of outright conflict breaking

out in the Middle East," said Karl Schamotta, chief market

strategist at Corpay in Toronto. "That is supporting the

dollar's safe haven appeal."

The dollar also bounced as a selloff on Wednesday following

dovish comments by Federal Reserve Chair Jerome Powell at the

conclusion of the U.S. central bank's two-day meeting was seen

as possibly overdone.

"Although Jerome Powell was extremely dovish in the press

conference, the statement released by the Federal Open Market

Committee really sounded more balanced," said Schamotta.

Powell said that interest rates could be cut as soon as

September if the U.S. economy follows its expected path, after

the Fed's new policy statement noted that "there has been some

further progress toward the (Federal Open Market) Committee's 2%

objective," while the unemployment rate, at 4.1%, "remains low."

Traders are now pricing in three 25-basis-point rate cuts by

year-end, indicating one cut at each of the Fed's September,

November and December meetings.

The next major U.S. economic release that is likely to drive

Fed policy will be Friday's government jobs report for July. It

is expected to show that employers added 175,000 jobs during the

month, while the unemployment rate is expected to stay steady at

4.1%.

The dollar index was last up 0.06% at 104.11.

Data on Thursday showed that the number of Americans filing

new applications for unemployment benefits increased to an

11-month high last week.

Sterling slipped 0.18% to $1.2833 after the Bank of

England cut interest rates following a tight vote by its

policymakers who were split over whether inflation pressures had

eased sufficiently.

Governor Andrew Bailey led the 5-4 decision to reduce rates

by a quarter-point to 5% and he said the BoE would move

cautiously going forward.

"If you look at the headlines that Bailey produced: caution

on cutting too quickly or by too much, it implies to me that

they're looking at a sort of a steady quarterly pace of

reductions," said Colin Asher, economist at Mizuho.

The euro touched a three-week low of $1.07775 and

was last down 0.11% at $1.0813.

The Japanese yen dipped, a day after a dramatic rally

following the Bank of Japan's decision to hike rates to 0.25%,

the highest since 2008.

The yen has gained since hitting a 38-year low of 161.96

against the dollar on July 3, boosted by interventions by

Japanese authorities and traders unwinding carry trades in which

they were short the yen and long U.S. dollar assets.

The dollar was last up 0.11% at 150.15.

In cryptocurrencies, bitcoin gained 0.03% to $64,584.