* Sterling edges down as investors eye UK election result
* Graphic: World FX rates in 2017 #
* Graphic on UK election: (Updates prices, market activity and comments to U.S. afternoon trading)
By Saqib Iqbal Ahmed
NEW YORK, June 8 (Reuters) - The greenback clung to slim gains against a basket of currencies on Thursday as investors took stock of former FBI Director James Comey's testimony to the U.S. Senate, while the euro weakened after the European Central Bank kept interest rates on hold.
Comey on Thursday accused President Donald Trump of firing him to try to undermine the bureau's investigation into possible collusion between Trump's 2016 presidential campaign team and Russia, but did not say whether he thought the president sought to obstruct justice. The dollar index , which tracks the greenback against six major currencies, was up 0.25 percent at 96.99, little changed from before the testimony.
"We don't really know anything today that we didn't really know yesterday. To me, there was nothing really to react to," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.
Against the yen, the greenback was up 0.18 percent to 109.99 yen, after rising to a two-day high of 110.38 yen.
The euro fell after the ECB cut its forecasts for inflation and said policymakers had not discussed scaling back the bank's massive bond-buying program. The euro, which weakened on Wednesday on reports that the ECB would cut its inflation forecasts, was down 0.38 percent to $1.1212, after dipping to $1.1196, its lowest level since May 31.
"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.
Meanwhile, sterling fell against the dollar while market bets on the currency's volatility over the next 24 hours touched their highest level in a year, as Britain voted in a national general election that some polls have suggested is too close to call. "I think people are nervous about sterling but the general positioning suggests that people anticipate (British Prime Minister Theresa) May to win and to still hold on to a majority," said Chandler.
Sterling hit a two-week high of $1.2977 earlier in the session after polling organizations' last surveys, but weakened later in the day to trade down 0.13 percent at $1.2942.
(Reporting by Saqib Iqbal Ahmed; Additional reporting by Ritvik Carvalho in London; Editing by Diane Craft and Leslie Adler)
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