Dollar drifts as US-Iran conflict intensifies; sterling edges higher

LONDON, July 20 (Reuters) - The dollar was broadly steady on Monday as cautious investors watched out for signals on the direction of the Iran war, while the pound edged higher as markets prepared for new British Prime Minister Andy Burnham.

The dollar index, which measures the greenback's strength against a basket of six currencies, was little changed at 100.78.

How are global currencies responding to geopolitical tensions?

Iran's Revolutionary Guards said on Monday they had struck U.S. military assets across the Middle East after another night of U.S. bombardment of Iranian cities, in a conflict that has disrupted energy supplies and stoked fears of global inflation.

"Markets, I think, have become somewhat more comfortable with the range of risks to be priced in and until something happens that catches traders by surprise, we're just not going to see a huge amount of volatility for the Middle East," Nick Rees, head of macro research at Monex Europe, said.

"It'll keep markets nervous. It'll keep markets cautious. But I think we're really going back to where we were, not in April, but in May, where volatility ground lower, because we saw just a general lack of conviction on where things were going to trade next," he said.

Brent crude futures were last a touch higher at $88.43 a barrel, having risen above the $90 mark earlier in the day.

The euro was broadly steady at $1.1432, while the British pound was 0.1% higher at $1.3466 as Burnham took over from Keir Starmer.

Traders are especially keen to see who Burnham will pick as the new finance minister given the UK's tricky fiscal position. UK assets last week were supported by reports that the job would likely go to Shabana Mahmood, widely regarded as a centrist, rather than a more left-leaning candidate.

"While we do not rule out a little further sterling strength during the Burnham honeymoon period, the UK's tight fiscal situation suggests a new cabinet will have to turn to tax increases if it wants to build out its plans to improve areas such as social care," Chris Turner, head of global markets at ING, said in a note.

Elsewhere, the U.S. dollar was down 0.14% at 6.7688 against the Chinese yuan in offshore trade after China kept its benchmark lending rates unchanged for a 14th consecutive month on Monday, in line with market expectations.

Against the yen, the U.S. dollar was flat at 162.39 yen in thin liquidity as Japan observed the Marine Day holiday.

Markets continue to anticipate no change to rates at the Federal Reserve's next meeting on July 29, with Fed funds futures pricing an implied 85.6% probability of a hold, compared with a 61.5% chance a month ago, according to the CME Group's FedWatch tool.

Cleveland Fed President Beth Hammack on Friday added her voice to a growing chorus of policymakers arguing interest rates may need to rise to beat back persistent inflation, setting up a charged debate at the Fed's next meeting and the possibility of dissents at Chair Kevin Warsh's second meeting at the helm.

(Reporting by Sophie Kiderlin in London and Gregor Stuart Hunter in Singapore; Editing by Jamie Freed, Andrei Khalip and Andrew Heavens)

Sinergia Empresarial continuará el seguimiento de esta información sobre dollar drifts as US-Iran conflict intensifies; sterling edges higher y ampliará la cobertura conforme se confirmen nuevos elementos relevantes para el ecosistema empresarial.