* Talk of a negative deposit rate by ECB official knocks
* Sterling in contrast jumps on upbeat UK outlook from BOE
* Aussie dollar eyes local jobs data due 0030 GMT
By Ian Chua
SYDNEY, Feb 13 The euro nursed losses early on
Thursday, having suffered a setback on dovish comments from a
top European Central Bank official, while a surprisingly upbeat
economic outlook from the Bank of England gave sterling a shot
in the arm.
ECB Executive Board member Benoit Coeure said the idea of
cutting into negative territory the rate the ECB pays banks to
hold their deposits overnight was "a very possible option".
His comments came barely a week after ECB President Mario
Draghi put markets on alert for possible action in March.
Adding to the euro's woes, data showed euro zone industrial
output fell more than expected in December. As a result,
investors quickly took profits on the single currency's two-week
highs against the dollar and yen this week.
The euro slipped to $1.3595 and 139.35 yen
, pulling further away from highs of $1.3684 and
"Being a member of the six person Executive Board, Coeure's
comments cannot be lightly dismissed and stoke expectations for
action at the March meeting," said Sean Callow, currency
strategist at Westpac in Sydney.
Against sterling, the common currency fell to a three-week
low of 81.78 pence.
Sterling made broad inroads against other currencies as well
after the Bank of England revised up its growth forecast for
2014 to 3.4 percent from 2.8 percent, a much more bullish
outlook than that of most economists.
It also hinted that interest rates could start to rise from
record lows in little more than a year.
"One of the fastest growing developed economies in Europe,
the United Kingdom may be the first to see its policies exit the
post-crisis management era," said Christopher Vecchio, analyst
The pound was last at $1.6620, having rallied
nearly 1 percent against the greenback on Wednesday.
With market action centred on the euro and pound, the dollar
and yen were pretty much left to their own devices.
The greenback last stood at 102.53 yen after a
directionless session that saw it contained well within the
previous day's trading range.
The Australian dollar also lost a bit of steam against the
greenback, having scaled a one-month peak of $0.9068 on
Wednesday. It last stood at $0.9013 as investors awaited a
closely watched jobs report due at 0030 GMT.
Analysts polled by Reuters expect a rebound of 15,000 jobs
in January, following a disappointing loss of 22,600 jobs in
The Aussie pared gains on the euro, which bounced back to
A$1.5075 from a two-month trough of A$1.4977 plumbed
Traders said a convincing break below key chart support at
A$1.4990/1.5020 was needed to see further downside in EUR/AUD.