LONDON, April 9 (Reuters) - The pound inched higher on the dollar on Thursday and held onto the bulk of U.S.-Iran ceasefire-inspired gains the previous session, though with that deal looking fragile it failed to climb any further.
Sterling was last up 0.1% on the dollar at $1.3407, well up from below $1.33 before the deal was announced but off its Wednesday high of $1.348, reflecting traders' nervousness about how sustainable the ceasefire will be.
Israel bombed more targets in Lebanon on Thursday, and there was no sign Iran had lifted its blockade of the Strait of Hormuz, which has caused the worst disruption to global energy supplies in history.
Tehran said there would be no deal as long as Israel was striking Lebanon.
The dollar has appreciated throughout the conflict as investors see the U.S. economy as being less exposed to the war - it is a net energy exporter - than other countries such as Britain.
The pound, like other European currencies, has risen or fallen on the dollar depending on headlines.
The pound also gained on the euro on Wednesday, which Francesco Pesole, currency analyst at ING, said was due to sterling's higher sensitivity to gains in equities, which surged on Wednesday.
The euro was last at 87.11 pence, a touch higher on the day, and bouncing off its Wednesday low of 86.88 pence.
Pesole said he does not think the pound can appreciate much more on the euro, noting that expectations of rate hikes from the European Central Bank could prove more sustained than those for the Bank of England.
"After all, the BoE was already ready to cut before the war began," he said.
Reporting by Alun John; Editing by Emelia Sithole-Matarise
Source: Reuters