The euro strengthened against the dollar in the last 24 hours, as the prospect of a rate rise in Europe gained credence.

This morning the euro stood at 1.1779 to the dollar and at 1.4836 against the pound.

European Central Bank's (ECB) Otmar Issing injected some urgency into the debate over European interest rate rises, stressing that the ECB would act swiftly to counter inflation.

"If it is necessary, we will act and we can act at any time," he declared.

The ECB raised rates for the first time in five years last week up to 2.25 per cent, with further rate rises clearly still on the cards.

Meanwhile in the UK the pound stayed steady, as the Bank of England announced it would be leaving interest rates on hold this month at 4.5 per cent.

Analysts had anticipated the move, which was widely predicted, but the new year could yet see further activity by the monetary policy committee.