Sterling ticks higher as dollar dips on lower oil prices

(Fixes typographical error in headline)

LONDON, Oct 9 (Reuters) - The pound rose on Friday as the dollar dipped on the back of falling oil prices, with Britain's currency set to end the week little changed against the US currency but higher versus the euro.

Currency markets have been roiled over the last two weeks by sharp rises in bond yields around the world, driven by rising energy prices.

The euro has particularly suffered as French bond yields have surged, exacerbated by concerns about the country's budget deficit, while the search for safe havens has boosted the dollar.

Yet a fall in oil prices helped pull global bond yields away from multi-decade highs and relieved the pressure on currencies, with the dollar dipping.

Sterling was last up 0.1% at $1.324. It fell to $1.3184 on Thursday as the dollar strengthened, around its lowest since late June.

The pound was little changed against the euro, with the single currency fetching 84.74 pence.

Sterling was set for its second weekly gain against the euro, however, after rallying sharply last week and hitting its highest since June 2025 on Wednesday at 84.49 pence per euro.

Brent crude oil was down 1% to $103.30 a barrel after US President Donald Trump said the country will not attack Iran before the US elections next month and said there had been productive talks with Tehran over the war.

Investment bank ING said the dollar could remain strong as energy prices support the case for further Federal Reserve interest rate hikes, keeping other currencies under pressure.

"We don’t see signs of a broader US dollar correction brewing," said Francesco Pesole, currency strategist at ING.

"The oil market is reluctant to price out the geopolitical premium that has kept prices above $100 a barrel despite improved Gulf supply."

(Reporting by Harry Robertson;Editing by Elaine Hardcastle)