* Euro dips after ECB policy decision
* Sterling off 2-week high
* Polls suggest PM May's Conservatives will win majority
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh#
* Graphic on UK election: tmsnrt.rs/2q7tC48
(Updates with U.S. market open, changes dateline from LONDON)
By Saqib Iqbal Ahmed
NEW YORK, June 8 The euro slipped against the
dollar on Thursday after the European Central Bank kept interest
rates on hold, while the greenback strengthened against a basket
of currencies as U.S. Senate testimony by former FBI Director
James Comey got underway.
The ECB dropped a reference to further interest rate cuts,
while repeating it expects rates to remain at record lows for an
extended period and well beyond its asset purchase program.
ECB Chief Mario Draghi said policymakers had not discussed
scaling back its massive bond-buying program.
The euro, which weakened on Wednesday on reports that the
ECB would cut its inflation forecasts, was down 0.36 percent to
$1.1215, after dipping to a 1-week low of $1.1196.
"Even though it was well telegraphed over the last 24 hours,
the future expectations on inflation came in a bit lower than
the market had been anticipating," said Dean Popplewell, chief
currency strategist at Oanda in Toronto.
"That sort of weighed on the euro."
The euro has risen against the dollar in the past five
months, partly due to the greenback's weakness, but also on the
view that rising inflation would prompt the ECB to raise
interest rates in early 2018.
Traders in the currency market will closely monitor U.S.
Senate testimony by Comey, worried this could dampen already
flagging momentum for President Donald Trump's agenda of rolling
back regulation and overhauling the tax code.
In written testimony released on Wednesday, Comey, who was
abruptly fired by Trump in May, said Trump had asked him to drop
an investigation of former National Security Adviser Michael
Flynn as part of a probe into Russia's alleged meddling in the
2016 presidential election.
"The market has been well briefed ahead of the testimony but
it really depends on what he may be asked and what his answers
will be," said Popplewell.
The dollar index, which tracks the greenback against
six major rivals, was up 0.3 percent at 97.039. Against the yen,
the greenback was up 0.48 percent to 110.32 yen.
Meanwhile sterling was down 0.35 at $1.2913.
A final opinion poll published on Thursday as Britons vote
in a national election showed Prime Minister Theresa May's
Conservatives widening their lead to 8 percentage points from 5
points, suggesting her gamble to call the vote to strengthen her
position in Brexit negotiations will pay off.
(Reporting by Saqib Iqbal Ahmed; Additional reporting by Ritvik
Carvalho in London; Editing by Bernadette Baum)