Dollar slips against euro after ECB holds rates

LONDON (AFP) - The dollar slid against the euro on Thursday after the European Central Bank and the Bank of England held their key interest rates at record-low levels on the eve of a key G20 finance meeting.

In late afternoon London deals on Thursday, the European single currency edged up to 1.4876 dollars compared with 1.4865 dollars late in New York on Wednesday.

Against the Japanese currency, the dollar eased to 90.60 yen from 90.75 yen late on Wednesday.

The ECB and BoE kept their key interest rates at record low levels of 1.0 percent and 0.5 percent respectively on Thursday while tracking the prospects of economic recovery.

The British central bank said it would also pump another 25 billion pounds (28 billion euros, 41 billion dollars) into Britain's recession-hit economy.

Calyon economist Frederik Ducrozet said the euro won support after upbeat comments from ECB President Jean-Claude Trichet on the improving eurozone economic outlook.

"The euro was first supported by Trichet's comments on the ongoing improvement in the economy," Ducrozet said.

"Euro/dollar reached an eight-day high at 1.4919 dollars before edging lower.

"Trichet also reiterated support for a strong dollar ahead of this weekend's G20 meeting. We believe that euro/dollar could hover around the 1.4900 level (heading) into the weekend."

Meanwhile, BoE policymakers decided Thursday to lift their quantitative easing (QE) programme to a total of 200 billion pounds on concern that Britain is mired in its longest recession since records began in 1955.

The British pound rallied against the euro and the dollar after the BoE also hinted that the economy was on the mend.

Finance ministers from the G20 grouping of major economies are meeting in Scotland on Friday and Saturday.

Elsewhere this week, market participants will focus Friday on crucial jobs data in the United States.

"All eyes are now on tomorrow's US non-farm payrolls," said GFT Global Markets analyst David Morrison.

"The crucial figure will be the unemployment rate. There are whispers that this could break above 10 percent -- which could really unsettle markets."