June 8, 2017 / 2:24 PM / 6 months ago

FOREX-Euro dips after ECB holds rates, dollar sturdy

* 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 (Reuters) - 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

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