Investing.com - The euro was little changed against the dollar on Thursday before a European Central Bank policy announcement and the pound rose to two-week highs as voting began in Britain’s election, with final polls pointing to a win for Prime Minister Teresa May’s party.
EUR/USD traded at 1.1256 by 07.44 AM GMT, holding above Wednesday’s low of 1.1203.
The ECB is not expected to make any changes to monetary policy, but traders will be watching President Mario Draghi’s statements for his assessment of the euro area economy.
The euro hit intra-day lows on Wednesday following reports that the ECB could cut inflation forecasts for the next three years. The report came after Draghi said last week that inflation remains subdued and still requires substantial stimulus.
Sterling pushed higher, with GBP/USD edging up 0.12% to 1.2974, its highest level since May 25.
Prime Minister Theresa May is on course to increase her majority in parliament in the British election, opinion polls showed on Wednesday, which would bolster her position in Brexit negotiations.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 96.67, not far from Wednesday’s seven-month nadir of 96.45.
The dollar edged lower against the safe haven yen, with USD/JPY trading at 109.69, edging back towards Wednesday’s seven-week trough of 109.10.
Markets remained cautious ahead of former FBI Director James Comey's testimony to a Senate committee later on Thursday.
In written testimony released on Wednesday, Comey said that President Donald Trump asked him to drop an investigation of former National Security Adviser Michael Flynn as part of a probe into Russia’s alleged involvement in the U.S. presidential election.
Investors are fearful that the Trump administration may be further damaged by any revelations that could emerge during the testimony, which could dampen already flagging momentum for the White House economic agenda.