Thursday June 4, 12:02 PM
Euro gains against dollar before ECB rate call
LONDON (AFP) - The euro gained ground against the dollar on Thursday ahead of an interest rate decision from the European Central Bank, but remained under the 2009 high struck the previous day.
In morning London trade, the euro advanced to 1.4211 dollars, up from 1.4156 late in New York on Wednesday, when it had hit a 2009 pinnacle of 1.4338.
Against the Japanese currency, the dollar climbed to 96.30 yen from 95.96 yen on Wednesday.
The European Central Bank (ECB) was to announce its latest monetary policy decision at 1145 GMT after a separate interest rate call from the Bank of England (BoE) at 1100 GMT.
"Both the BoE and ECB are unlikely to cut interest rates from their current levels of 0.5 percent and 1.0 percent respectively," said Calyon analyst Mitul Kotecha.
He added: "Although the ECB is widely expected to keep policy on hold, ECB President (Claude) Trichet is likely to keep the door open to further easing."
The ECB is tipped to keep its key interest rate at an all-time low of 1.0 percent on Thursday and to release details of bond purchases aimed at freeing up clogged credit markets.
The bank has slashed its main lending rate by 3.25 percentage points in less than a year, but eurozone credit has still got tighter because commercial banks have not passed on much of the unlimited cash now at their disposal.
Meanwhile, the Bank of England's latest meeting takes place against the backdrop of local and European elections in Britain, with Prime Minister Gordon Brown heading for a battering at the polls.
Brown is struggling to assert his authority amid resignations and an alleged plot to oust him. Four government ministers, including two members of his cabinet, have quit in the past two days.
"The probability of status quo from the BoE has shifted attention onto political developments, with resignations from Brown's cabinet and an imminent cabinet reshuffle adding to the uncertainty over Brown's future," added Kotecha.
This week, the single currency, regarded as a higher-risk currency than the dollar, has struck a series of 2009 dollar peaks thanks to improving investor confidence.
In London trading on Thursday, the euro was changing hands at 1.4211 dollars against 1.4156 dollars late on Wednesday, at 136.96 yen (135.84), 0.8671 pounds (0.8674) and 1.5152 Swiss francs (1.5154).
The dollar stood at 96.30 yen (95.96) and 1.0653 Swiss francs (1.0704).
The pound was at 1.6404 dollars (1.6315).
On the London Bullion Market, the price of gold fell to 969.80 dollars an ounce from 976.75 dollars an ounce late on Wednesday.
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