The British pound rises modestly against the dollar as falling oil prices and shifting Fed expectations offset geopolitical tensions.
The British pound advanced 0.2% against the US dollar on Friday, supported by a decline in oil prices that weighed on the greenback. Despite the daily gain, GBP/USD remains on track for a weekly loss of nearly 0.7% amid shifting Federal Reserve rate hike expectations.
US economic data showed mixed signals, with manufacturing activity easing as the S&P Global Manufacturing PMI fell to 53.8 from 53.9, missing estimates of 54.5. Services PMI, however, surged to 53.6 from 51.2, beating forecasts of 51. Market participants now see a 41% chance of a Fed rate hike in July, up 8% from the previous day.
Geopolitical tensions, including the US-Iran conflict, were largely ignored by markets as risk appetite improved. Reports indicated no immediate arms sales from China or Russia to Iran, while diplomatic efforts by Pakistan aimed to resume US-Iran talks.