* Sterling slides on BoE concern about rise in bond yields
* BoE, ECB leave rates unchanged
* Euro dips versus dollar before Draghi news conference
* Draghi expected to sound a dovish tone
By Jessica Mortimer
LONDON, July 4 Sterling slid sharply after the
Bank of England expressed concern on Thursday about rising bond
yields and the euro fell against the dollar before a news
conference by European Central Bank President Mario Draghi.
The BoE left policy unchanged, but said the implied rise in
the expected future path of interest rates was not warranted by
the state of the economy and could weigh on the growth and
Sterling fell 1.3 percent on the day to hit
$1.5074, its lowest since late May.
The euro was last at $1.2990, down 0.1 percent, after
the ECB left interest rates on hold, as expected. A downbeat
tone from Draghi at a news conference beginning at 1230 GMT
could see it drop towards Wednesday's low of $1.2923, its
weakest since late May.
Many traders expected Draghi to highlight the difference
between monetary policy in the euro zone and the United States,
where stimulus is expected to be scaled back later this year.
But if he does not, the euro could rebound, they said.
The euro rose more than 1 percent to a 2 1/2-month peak
against sterling of 86.34 pence.
"The market is dominated by sterling after the BoE," said
Paul Robson, currency strategist at RBS. "I see general downside
for the euro today. I think, like the BoE, the ECB will want to
temper market enthusiasm for higher rates and will want to put
clear water between it and the Federal Reserve."
Trading volumes were light due to a public holiday in the
United States and this could lead to volatile price action. Some
investors were wary of taking big positions before monthly U.S.
jobs data on Friday, which would lift the dollar if it was
The euro was down 0.2 percent at 129.71 yen.
"The likelihood of a dovish statement from the ECB is high,"
said Hans Redeker, head of global foreign exchange strategy at
Morgan Stanley. He added there was a chance the ECB could issue
forward guidance on monetary policy which would hurt the euro.
The dollar index, which measures the U.S. currency's value
against a basket of currencies, was up 0.2 percent at
83.383, near a five-week high of 83.717 hit on Wednesday.
But the dollar fell 0.1 percent against a broadly firmer
Japanese yen to 99.81 yen.
The Australian dollar rose 0.4 percent to $0.9121,
off a recent three-year low of $0.9036, after the country's
central bank deputy governor said markets had misinterpreted
remarks about its latest policy meeting.