LONDON, June 23 (Reuters) - The pound fell against the
dollar on Monday with the greenback benefiting from safe-haven
demand as investors assessed the risk of an Iranian response to
U.S. attacks on its nuclear sites.
By 1054 GMT the pound was down 0.5% versus the dollar at
$1.33795, its lowest level since May 20.
British Prime Minister Keir Starmer spoke to U.S. President
Donald Trump on Sunday, his office said. Starmer also urged Iran
to return to the negotiating table.
Market focus is firmly on the price of oil, which earlier
spiked as much as 5.7% and was last up 0.5%.
"Ultimately the pound is exposed...Pro-cyclical currencies
have a negative sensitivity to oil prices," said Francesco
Pesole, FX strategist at ING.
Elsewhere, UK flash PMIs hit screens showing business
activity expanded modestly in June, but the data barely moved
the needle on the pound.
The S&P Global UK Composite Purchasing Managers' Index rose
to 50.7 from 50.3 in May - edging further above the 50.0 growth
threshold.
"Overall, the PMIs suggest that the biggest hit to the
economy was in April and things are now starting to recover.
That said, the subdued level of the PMIs is still pointing to
near stagnation," Thomas Pugh, chief economist at RSM UK, wrote
in a note.
The Bank of England held interest rates at 4.25% last
Thursday as expected but flagged a weaker labour market and the
risk of higher energy prices as conflict in the Middle East
escalated.
Despite the hold, market watchers took a doveish hint from
the 6-3 vote split in favour of keeping rates on hold, with
three MPC members in favour of a cut, a factor that is still
playing a role according to ING's Pesole.
"Markets are still tending towards the doveish side for the
pound curve," he said.
As of Monday, 58% of traders were betting on a 25-bps rate
cut at the BoE's next session in August, with 42% betting on no
change.